Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

SAINT MARY, SUMMERSTOWN BILL [Lords]

Read the Third time and passed, without Amendment.

BIRMINGHAM CORPORATION BILL

As amended, considered; to be read the Third time.

HOLY TRINITY, WEST HAMPSTEAD BILL

As amended, considered; to be read the Third time.

SAINT SAVIOUR, PADDINGTON BILL

As amended, considered; to be read the Third time.

Oral Answers to Questions — POST OFFICE

Sub-Office Assistants (Wages)

Mrs. Joyce Butler: asked the Postmaster-General what is the hourly rate of pay of women part-time workers in sub-past offices.

The Assistant Postmaster-General (Mr. Joseph Slater): No rate of pay is laid down for sub-office assistants. One of the conditions on which a sub-postmaster holds his appointment is, however, that conditions for his employees on Post Office work should not be less favourable than those agreed for shop assistants generally in the same district.

Mrs. Butler: Can my right hon. Friend say what action is taken to ensure that sub-postmasters pay wages to part-time workers consistent with the shop assistants' scale? Does he not think that

the time is probably right for a reconsideration of this scale with the appropriate body to make it more commensurate with the work that is actually done?

Mr. Slater: A sub-postmaster makes an annual return to the head-postmaster of the assistants employed on post office work, their pay and the average number of hours worked. If the wages seem out of line, representations would be made to him, but it is for him to decide whether payment above the general level is appropriate.

Post Office Services (Publicity)

Mr. Stratton Mills: asked the Postmaster General what proposals he has to publicise the range of services and equipment provided by the Post Office telephone service.

The Postmaster-General (Mr. Roy Mason): A comprehensive information booklet will be delivered to new residential STD subscribers from May onwards, and full publicity will be given in Telephone Directories commencing in the summer. Further descriptive leaflets will be added to the 59 already available, of which over one million were distributed last year. Press advertising will be extended.

Mr. Mills: Does the right hon. Gentleman recognise that the Prices and Incomes Board's Report seriously criticised the Post Office on this matter? Will he confirm that the announcement that he has made amounts to a major sales drive to publicise the equipment and services which the Post Office telephone service can at present offer?

Mr. Mason: It is true that the Prices and Incomes Board criticised the Post Office for not doing enough on advertising. But, in fairness to the Post Office, plans for increased promotional activity were in hand and some of these I have announced today.

Mr. Ednyfed Hudson Davies: Concerning publicity, is my right hon. Friend aware of the very favourable response given by the public to the telephone exchanges "Open Fortnight"? I refer particularly to Conway. Will he take steps to make other aspects of Post Office work visible to the public In a similar way?

Mr. Mason: I am obliged to my hon. Friend for those remarks. It is true that under previous administrations not enough advertising was done, but this was dui to a limitation of capital expenditure. It is our intention to advertise much more positively in future.

Mr. Bryan: Will the right hon. Gentleman confirm or deny the almost unbelievable statement in paragraph 46 of the Report of the Prices and Incomes Board that the telephone sales manager's telephone number is not even in the directory?

Mr. Mason: The telephone sales manager's telephone number is the same as the telephone manager's. I have already looked into this, because it is farcical. I thought that if we wanted to sell, and sell positively, the telephone sales manager's telephone number should be different and should be differently portrayed in the directory.

National Board for Prices and Incomes (Report)

Mr. Stratton Mills: asked the Postmaster General if he will make a statement on the National Board for Prices and Incomes Report on the Post Office.

Mr. Costain: asked the Postmaster General in what circumstances there is still a requirement that telephone rentals should be paid 15 months in advance.

Mr. Jopling: asked the Postmaster General if he will make a statement on the proposed increases in postal and telephone charges recommended in the Report of the National Board for Prices and Incomes.

Sir Harmar Nicholls: asked the Postmaster General if he will provide a reduced telephone rental for the elderly.

Mr. Mason: I would refer the hon. Gentleman to the statement I made on 10th April.—[Vol. 762, c. 1373–1402.]

Mr. Mills: Will the right hon. Gentleman confirm that a number of the increases which he announced in the House on 10th April were not considered in detail by the Prices and Incomes Board? Will he consider referring them to it for closer examination on these matters?

Mr. Mason: In view of the fact that there were 400 tariff changes, I do not think that it would have been possible for the Board to have examined them all. I do not believe, therefore, that any good would be served by going back on the matter.

Mr. Jopling: What progress does the right hon. Gentleman expect to make to meet the criteria of the White Paper on Nationalised Industries, which suggested that there should be an 8 per cent. profit on the operations of the Post Office?

Mr. Mason: Is the hon. Gentleman asking that there should be a bigger profit on the operations of the Post Office?

Mr. Jopling: An 8 per cent. profit was recommended.

Mr. Mason: The hon. Gentleman is wrong. On the postal side, our aim is to get a return of 2 per cent. on total expenditure. On the telephone communications side, our new aim is to get 8½ per cent. return on net assets.

Capital Expenditure

Mr. Ridley: asked the Postmaster-General by how much he estimates that the Post Office forecast of capital expenditure of £1,200 million over the next three years would be reduced by raising the discounted cash flow rate to 10 per cent.

Mr. Mason: Post Office capital expenditure over the next three years will aim to meet the demand for service at the revised charges I announced on 10th April. The effect of raising the discount rate for new investment to 10 per cent. would either be largely to stop providing telephones for new residential subscribers, as the charges are not designed to earn this return, or to raise charges further. In the former case the reduction in capital expenditure would be considerable. In the latter it would depend on how the higher charges affected demand.—[Vol. 762, c. 1373–1402.]

Mr. Ridley: Is the right hon. Gentleman aware that his own White Paper says that when the level of public investment is too great the discounted cash flow rate should be raised? Since the present expenditure level is beyond the capacity


of the economy to support, why will not the right hon. Gentleman adopt the course suggested in the Question?

Mr. Mason: The hon. Gentleman is specifically referring in the Question to raising the discounted cash flow rate to 10 per cent. His suggestion—taking his figure of 10 per cent.—would mean increased prices all round or, alternatively, part of the service would have to be killed off.

Post Office Corporation (Buildings)

Mr. Ridley: asked the Postmaster-General whether it is proposed that the new Post Office Corporation will buy and construct its own buildings, or whether this will still be done through the Ministry of Public Building and Works.

Mr. Joseph Slater: I would refer the hon. Gentleman to paragraph 41 of the White Paper on Reorganisation of the Post Office.

Mr. Ridley: Will the hon. Gentleman give an undertaking to stop this demarcation dispute between the Ministry of Public Building and Works and the new Post Office Corporation? Is he aware that it is inefficient to prevent the Corporation from being allowed to construct, buy and sell its buildings, just the same as any of the other nationalised industries?

Mr. Slater: The White Paper says that since 1961 the Post Office and the Ministry have both been free to terminate or modify their relationship, subject to due notice and consultation. It is intended that this should remain the position when the Corporation is set up.

Sub-Offices (Anti-Bandit Screens)

Mrs. Butler: asked the Postmaster-General if he will meet the full cost of anti-bandit screens erected in sub-post offices in crime-prone areas.

Sir H. Lucas-Tooth: asked the Postmaster-General what steps he is taking to give sub-postmasters protection against attack by robbers.

Mr. Berry: asked the Postmaster-General if he will accept responsibility for the repair of anti-bandit screens in sub-post offices damaged by criminal action.

Mr. Weatherill: asked the Postmaster-General if, in view of the increasing number of attacks on sub-post offices, he will ensure that protective screens are made available free of charge to sub-postmasters with offices in officially designated crime prone areas.

Mr. Mason: I am keen that sub-postmasters should equip their offices with anti-bandit screens. The National Federation of Sub-Postmasters has accepted our offer which is to pay £50 towards the cost of the screen at up to 10,000 offices and to provide interest free loans to meet the balance of the cost at these offices. This I consider to be a fair and reasonable arrangement. As regards repair, once an anti-bandit screen is installed in a sub-post office it becomes the sole property of the sub-postmaster. As such it could be covered by his insurance of furniture and fittings and I think it reasonable that he should meet the cost of repairs.

Mrs. Butler: Does my right hon. Friend appreciate the strength of public feeling that sub-postmasters should not be out of pocket in providing protective devices of modern types to protect the public's money? If my right hon. Friend will not meet the full cost, will he look again at the contracts and salaries of sub-postmasters with a view to ensuring that this matter is taken into account when they are engaged?

Mr. Mason: To answer the latter part of my hon. Friend's supplementary question, I remind her that her Question was put earlier to the Assistant Postmaster-General. To answer the first part, I remind her that the Joint Committee looked into this matter and that the anti-bandit screen idea emanated from that Committee. The National Federation of Sub-Postmasters has sought more and I recognise that there is democratic, legitimate pressure from a faction in London. Nevertheless, I assure my hon. Friend that we are going out of our way to assist these people.

Sir H. Lucas-Tooth: Does the right hon. Gentleman realise that the danger of attack has been greatly increased because of the increased amount of cash and stock which postmasters are now obliged to hold under the present Government's policies, particularly S.E.T.? As the Government have changed the conditions of


these people, surely the Government should make good in full any additional cost that is thrown on them. Is the right hon. Gentleman aware that this additional cost is not only the £100 but also the cost of installation?

Mr. Mason: The hon. Gentleman is wrong in the first part of his question. In the past two years there has been no noticable increase in attacks on sub-post offices. To answer the remainder of his question, I remind him that it will already be costing us £500,000 to aid sub-postmasters in the erection of anti-bandit screens and that we are already spending another £500,000 on other security measures, including burglar alarms, the anchoring of safes and so on. We are also spending about £80,000 a year on their maintenance.

Mr. Berry: In connection with attacks of this kind, would not the right hon. Gentleman agree that it is not right to pass the cost on to the insurance companies but that sub-postmasters should be protected and helped by the Government in their endeavour to protect Government and public money?

Mr. Mason: Initially, as I have made it clear, we are already spending a lot of money, particularly in crime-prone areas. I suggest that we carry on with this and see how it works out.

Mr. Bryan: Will not the right hon. Gentleman look at this whole matter again? Would he agree that bandits rob post offices for Post Office property and money? That being so, should not the Post Office pay the full price for defending that property?

Mr. Mason: As I said, I suggest that we proceed as I have outlined and see how things work out. We are erecting 10,000 anti-bandit screens and are helping sub-postmasters a great deal. This being so, we should proceed and see how this works out.

Postal Charges

Sir G. Nabarro: asked the Postmaster-General what improvements in postal services for first-class mail costing 5d. per letter, and 4d. for second-class mail, including greetings cards and printed matter, in unsealed envelopes, and postcards, will result from these

increases in postal charges, respectively, 25 per cent. for first-class mail and 33⅓ per cent. for second-class mail; why he has approved such increases which are, respectively, over nine times and over seven times the Government's norm of 3½ per cent.; and whether he will make a statement.

Mr. Mason: The aim of the new letter service will be to give first-class mail a service which is as good as the best we give now, with improved reliability where necessary. Second-class mail will generally take a day longer than first-class. I have approved the increased charges for the reasons shown in paragraph 207 of the Report of the National Board for Prices and Incomes on Post Office charges.

Sir G. Nabarro: While not accepting any part of the right hon. Gentleman's reply, may I ask him to recognise that the Post Office is now in the van of price increases and that the increase in letter post at nine times and seven times, respectively, the Government norm is shocking and reprehensible, and a very bad example to the country?

Mr. Mason: If the hon. Gentleman wants to be purely political about it, I ought to remind him and his hon. Friends that in 1962–63 we lost £8 million on the post, in 1963–64 we lost another £8 million on the post, and in 1964–65, the last financial year for which hon. Gentlemen opposite were responsible, we lost £20 million. That meant that we lost £36 million in three years, but the hon. Member and his hon. Friends would do nothing about it purely for political reasons. We have, therefore, had to try to tackle the problem now.

Mr. Ian Gilmour: Does not the right hon. Gentleman agree that the increase in alarm calls, not of 30 per cent. but of 300 per cent., is greatly excessive and should be reduced?

Mr. Mason: No, Sir, I do not. When we talk about price increases—and the hon. Gentleman earlier mentioned wage increases—he should realise that these increases are determined for a few years, and not for one year on its own.

Inland Telegram Service

Mr. Mawby: asked the Postmaster-General if he will make a statement on the future of the telegram service.

Mr. Mason: The future of the inland telegram service is still under review.

Mr. Mawby: Will the right hon. Gentleman take notice of the grave problem of the telegram service continually losing money? While a service is continuing to lose money, it is obviously constituting a drain on other profitable services which in the end will suffer.

Mr. Mason: That is one of our problems. We are losing between £2 million and £3 million a year on the inland service at the moment.

Mr. Dobson: Will my right hon. Friend note that one of the problems is not the loss of telegraph traffic as such, but the uncertainty for the staff employed in the many telegraph offices throughout the country? I hope that he will make a speedy decision about the Government's policy as it affects the telegraph service.

Mr. Mason: I am aware of that, and we are treating it as a matter of urgency.

Mr. Bryan: In this review of the telegram service, will the right hon. Gentleman bear in mind that there are 1,300,000 people over 65 who live alone, out of whom only 18 per cent. have telephones, and that a telegram service means a lot to them?

Mr. Mason: This is the problem of the emergency service, and we shall keep that in mind, too.

Opening and Closing Hours

Mr. Mawby: asked the Postmaster-General if he will make a statement on the question of the opening and closing hours of certain post offices as suggested by the National Board for Prices and Incomes.

Mr. Mason: I am studying this suggestion along with the others in the Board's Report.

Mr. Mawby: I am glad that due notice is being taken of that. Can the right hon. Gentleman assure the House that in all the discussions which take place there will be room for different arrangements for different areas according to the commercial requirements of the areas, and that he will not stick to a rigid hour for opening and closing?

Mr. Mason: That is the position now. Certain cities and towns do not conform to the general practice which we have laid down. This is solely because of the pressure of demand, and we shall keep that in mind all the time.

Costing System

Sir Harmar Nicholls: asked the Postmaster-General if he will make a statement on proposed methods of improving the costing system of the Post Office.

Mr. Bryan: asked the Postmaster-General what changes he proposes to make in the costing systems used by the Post Office.

Mr. Michael Shaw: asked the Postmaster-General what steps he is taking to improve the costing system of the Post Office having regard to the criticism of the National Board for Prices and Incomes.

Mr. Mason: The comments by the National Board for Prices and Incomes were not primarily directed at the costing system as such but at its use in tariff fixing. It said that the Post Office relied too much for this purpose on fully allocated costs and that the emphasis should be on long run marginal costs. I am adopting its recommendation to under-take further work on this subject.

Sir Harmar Nicholls: The right hon. Gentleman will see from the Report which he has had of the investigation that this ought to be looked at in depth, because there is a lot of concern about it, and it is wrong that the Post Office should get a bad reputation because of the lack of attention given to it at administrative level.

Mr. Mason: As I said in my original Reply, although we do use this method, for example, for trunk calls and new information services, and for a few others, we are prepared to look at it further.

Mr. Bryan: Was it not rather extraordinary that this system, which was the foundation on which these enormous tariff changes were to be made, did not even show how costs reacted to changes in the volume of traffic in any service?

Mr. Mason: I cannot go into those details now. There was a genuine disagreement between the National Board for Prices and Incomes and ourselves on our costing system, and we are prepared to look at the Board's proposal.

Computers

Mr. Dobson: asked the Postmaster-General (1) how many computers have been installed under the Post Office data processing plan; where they are located; and which types of computers have been selected;

(2) what steps have been taken to advertise and inform industry that the Post Office computer network will shortly be in operation.

Mr. Joseph Slater: Nine existing computers have been taken over by the National Data Processing Service: six are in London and one each in Edinburgh, Derby and Portsmouth. The computers are two Elliott 405, six English Electric LEO 326 and one RCA Spectra 70/45. The Spectra is on loan from English Electric pending supply of their own 4/70. A certain amount of work is already being undertaken for customers outside the Post Office within the present limited resources. It would not be appropriate to advertise the service generally at present.

Mr. Dobson: I thank my hon. Friend for the detail of that Answer. When does he feel that he will be able to advertise this very important service to industry? Also, would he note that the service could be of particular value to industry in the South-West? What is the additional number of computers used in the Post Office in N.D.P.S. services?

Mr. Slater: We are limited in advertising at the outset by a shortage of experienced assistants. However, a recruiting and training programme is under way, but it takes time to build up a service of this kind. Therefore, marketing policy will be geared closely to our development resources. In regard to additional computers, there are four more English Electric 4/70 in our plans, two in London and one each in Bristol

and Leeds, and tenders have been invited from 21 manufacturers for two further computers for the London Heathrow Airport project.

Mr. Fortescue: When will an effective service of data transmission, as opposed to data processing, be available through the Post Office lines?

Mr. Slater: This is an innovation for the Post Office. We have started from scratch; what has been done up to date is very good and will proceed.

Sub-Offices (Attacks)

Mr. Hastings: asked the Postmaster-General what has been the incidence of attacks by thieves on sub-post offices during 1965, 1966, 1967, and 1968, respectively.

Mr. Mason: I am circulating the figures in the OFFICIAL REPORT.

Mr. Hastings: Is not the incidence of these crimes very worrying? Would the right hon. Gentleman not agree that an advance of £50 towards the installation of anti-bandit screens, which cost well over £200, is less than generous, particularly since country postmasters are liable for the losses if money is stolen and many such post offices hold up to £7,000 or £8,000?

Mr. Mason: I went through these points earlier. In the crime-prone areas, there has been no increase in the past two years and we have now asked the Home Office to second a police officer to advise us further on security at post offices.

Mr. Lipton: Is my right hon. Friend aware that the police officer does not have to buy his own truncheon? Therefore, why should these sub-post-masters have to pay for the "weapons" which they require to defend public money?

Mr. Mason: I heard that point earlier, too. These sub-postmasters are our agents; they took on these post offices knowing full well what some of the dangers and risks were.

Following is the information:

1. Robberies/attempted robberies at sub-post offices (attacks by thieves who use or threaten violence against staff).

Robberies
Attempted Robberies (No loss)
Total


1964–65
37
45
82


1965–66
59
56
115


1966–67
49
38
87


1967–68
58
48
106

2. Burglary/breaking at sub-post offices (attacks on premises outside office hours not involving violence or threat of violence against staff).

Successful attacks
Unsuccessful attacks (No loss)
Total


1964–65
217
183
400


1965–66
318
169
487


1966–67
265
138
403


1967–68
279
156
435

Mr. Silvester: asked the Postmaster-General how many attacks during working hours were made by thieves on sub-post offices in the Greater London area in 1967 and in 1968; what injuries were sustained by sub-postmasters and their staffs; and what was the total value of the goods stolen.

Mr. Mason: In the London Postal Region, which is larger than the G.L.C. area, 37 and 34, respectively, in the years ending 31st March, 1967, and 31st March, 1968. In 39 attacks there was no injury to staff, in 21 there was slight injury, and in 11 there was more serious injury. Losses totalled £123,000, but this includes the face value of non-negotiable stock.

Mr. Silvester: Although the Postmaster-General has indicated that in many cases there were no serious injuries to staff in that period, is he aware that there is much apprehension amongst the staff of sub-post offices in crime-prone areas? Will he now reconsider the statement he has made twice today to the effect that he will not bear the full cost of the loss as a result of these banditries?

Mr. Mason: I must again reject that suggestion. I cannot say that we will pay the full cost. We have gone a great way in assisting sub-postmasters. This has been agreed by their National Federation. In the area of the London postal region alone there are 1,625 sub-post offices and we are going out of our way to help them. That should be sufficient.

Envelopes (Size)

Sir H. Lucas-Tooth: asked the Postmaster-General what particular considerations led him to require post office-preferred envelopes to have the longer side at least 1·414 times the shorter side.

Mr. Joseph Slater: Envelopes with one side appreciably longer than the other are most suitable for our sorting office machines. The proportions quoted are those recommended for stationery by the International Standards Organisation.

Sir H. Lucas-Tooth: Is it really necessary to have this figure to three places of decimals? What will happen in a dispute between the postmaster and the person to whom a letter is delivered if there is an over-charge and the person wants to know how the 1·414 proportion has been arrived at?

Mr. Slater: The range of sizes which we have adopted was recommended in the first place by the Universal Postal Union, and it has been taken up by other countries; so we are in line.

Damaged Postal Packets (Scotland)

Mr. Eadie: asked the Postmaster-General how many complaints he has received about damaged postal packets in Scotland; and what action is being taken as a result.

Mr. Joseph Slater: In March 1968 complaints were made about 24 letter packets and 473 parcels. Where appropriate we advise the senders about the best methods of packing, and where damage was clearly caused by mishandling in the post we do all we can to prevent a recurrence.

Mr. Eadie: Do not the figures reveal an unsatisfactory position? Will my hon. Friend consider the matter very carefully?

Mr. Slater: No, I do not think so. In the month in question over 5 million letter packets and 782,000 parcels were posted in Scotland. If anything, there has been a slight fall in the number of complaints. Hon. Members who have visited sorting offices will have seen, as I have, the way in which some parcels are wrapped and sent off. Our people are kept very busy trying to get the parcels to their proper destination.

Parcel (Claim)

Mr. Paget: asked the Postmaster-General when he proposes to deal with the claim made by Mr. Moss, of 2 Vicarage Close, Kingsthorpe, Northampton, in respect of a parcel lost by the Post Office on 8th January, and passed by the Northampton Post Office to the Controller, R.L.B., Mount Pleasant Post Office, London, on 8th February; and if he will state the cause of this long delay.

Mr. Joseph Slater: The claim was settled on 9th April. Some of the time was needed to complete inquiries at the offices which might have handled the parcel. Nevertheless, there was some inexcusable delay, which I much regret, and suitable action has been taken.

Mr. Paget: I am most grateful.

Letter (Delay)

Sir Knox Cunningham: asked the Postmaster-General what steps he is taking to prevent delays of more than one month's duration in delivery of first class mail within the United Kingdom, as in the example sent to him by the honourable Member for Antrim, South; and what action he intends to take to halt further deterioration in the postal services.

Mr. Joseph Slater: I am very sorry about the long delay to this letter. Unfortunately, it was delivered to a wrong address, and was not recovered by the Post Office until several weeks later. We shall do all we can to prevent mistakes like this, but we cannot entirely eliminate human errors.

Sir Knox Cunningham: Is the hon. Gentleman aware that in this complaint other references were made to further delays? Has not the service deteriorated in the past year? What does he intend to do about it?

Mr. Slater: I cannot agree with everything that the hon. and learned Gentleman has said, although I am sympathetic about what happened in this case. Delay is inevitable with the vast amount of mail that we handle. Despite all the efforts made to give consistently good service, a small proportion will suffer in transit.

Oral Answers to Questions — TELEPHONE SERVICE

South of France Calls (Audibility)

Sir R. Russell: asked the Postmaster-General if he is aware that telephone conversations between London and some places in the South of France are almost inaudible; and if he will make representations to the French Government with a view to improving the service.

Mr. Joseph Slater: Complaints of difficulties with calls to a few small exchanges in the South of France have been referred to the appropriate authorities in France and are receiving attention there.

Sir R. Russell: While thanking the hon. Gentleman for that Answer, may I ask him if he is aware that while a recent telephone conversation which I had with my wife from this area was almost inaudible, some years ago when I telephoned her from Wellington, New Zealand, the line was so clear that we might have been in adjoining rooms?

Mr. Slater: We are in constant contact with the French authorities in matters of transmission and we are at present awaiting information from them.

Woking and Byfleet

Mr. Onslow: asked the Postmaster-General what representations he has received concerning the lack of capacity for new telephone subscribers on the Woking and Byfleet telephone exchanges; and what action he proposes to take.

Mr. Joseph Slater: We have received complaints from the hon. Gentleman about Byfleet exchange. Equipment extensions now being undertaken will enable some applicants to be given service at Byfleet in the summer and the remainder by the end of this year. There is ample spare exchange capacity at Woking.

Mr. Onslow: Will the hon. Gentleman accept that there is. nevertheless, a long waiting period at Woking and Byfleet, and that although some action has been taken, more is necessary? Will he take the opportunity of the so-called "Telephone Fortnight" to issue a public apology to frustrated subscribers?

Mr. Slater: No, Sir, I do not think so. I have written to the hon. Gentleman about his constituency. I think that what we are doing now and what is happening is in the order of advancement.

No Waiting List Areas

Mr. Robert Cooke: asked the Postmaster-General what steps he is taking to stimulate demand for telephones in those areas of the country where there is no waiting list.

Mr. Mason: Some experimental local schemes have been carried out during the past year. I intend to extend our efforts.

Mr. Cooke: Surely the right hon. Gentleman can give us a little more detail than that? Has he written to people who have no telephones suggesting that they may like to have one?

Mr. Mason: Local schemes, including a direct mail approach, local exhibitions and displays and special inquiry facilities at post offices were tried out in 28 areas.

Mr. James Hamilton: Is my right hon. Friend aware that in many parts of the country people are waiting for telephones but cannot get them because of a shortage of equipment? Does he agree that some of the factories in my constituency could be used to produce this equipment, which would be advantageous to the people who want telephones, and also would assist the problem of unemployment in my constituency?

Mr. Mason: I am aware of the demands of the development areas, and particularly of Scotland. Exchange equipment is in great demand, and we are not getting this quickly enough. One reason is that it takes five years from design to completion of a telephone exchange. Another reason why we do not have the necessary equipment is that hon. Gentlemen opposite never attempted to invest properly in the future of telecommunications.

Call Failures and Faults

Mr. Robert Cooke: asked the Postmaster-General what proposals he has for reducing the number of call failures and faults in the telephone service.

Mr. Mason: Most failures are caused by overloading. To remedy this, 12,000

trunk lines and 800 new exchanges and additions to exchanges will be added this year. We are now using automatic fault detectors to identify equipment liable to cause failures.

Mr. Cooke: Is the right hon. Gentleman aware that the average rate of failure is pretty considerable, and if the average rate is considerable the worst must be very bad? Will he keep on trying to remedy this?

Mr. Mason: That is why I said in my original reply that there is congestion and overloading, and this is particularly so in the hon. Gentleman's region. This will be reduced progressively over the next six months.

Mr. Stratton Mills: Does the right hon. Gentleman recall the document "Post Office Prospects" in which he said that dealing with faults in the year 1968–69 would be the dominant task? Is there any evidence that there has been an improvement?

Mr. Mason: It is being improved. I made a speech last week when opening "Telephone Fortnight", during which I gave an indication of this. Secondly, I am setting up several network co-ordination centres throughout the country to maintain general surveillance of the trunk network, to locate and identify weak spots and remedy them.

Private Subscribers (Telephone Use)

Mr. Jopling: asked the Postmaster-General what proposals he has for stopping the decline in use of the telephone by existing private subscribers.

Mr. Mason: The new call charges are designed to encourage greater use of the telephone at off-peak periods when private use predominates, and they are being widely publicised. There is no evidence of a decline.

Mr. Jopling: Has the right hon. Gentleman seen the evidence in paragraph 136 of the Report which shows that there has been a decline? Can the right hon. Gentleman name any other country in the world whose people find they have more and more people to telephone but who use their telephones less and less?

Mr. Mason: On the first point, the latest figures before me show that this


has now started to level off, and therefore it is starting to contradict that out-of-date passage in the Report. Secondly, we extended the hours of cheap calls from 6 p.m. in the evening to 8 a.m., a two-hour extension. We have cheap calls on Sunday, and in my recent statement I said that there would be marginally cheaper trunk calls on Saturdays as well.

Nationalised Industries (Ex-Directory Numbers)

Captain W. Elliot: asked the Postmaster-General on what conditions his regulations allow the nationalised industries to put their telephone numbers ex-directory; and if he will make a statement.

Mr. Mason: The Telephone Regulations, 1965, make no distinction between requests from the nationalised industries for "ex-directory" numbers and requests from other subscribers.

Captain Elliot: Is the Postmaster-General aware that many of the British Road Services' depots are applying to go ex-directory and that this is causing great inconvenience to customers? Is he aware also that a British Road Services official said that as a rule the organisation does not consider claims for compensation for goods if not made within 14 days of despatch? Goods often take longer to be delivered and therefore it is important that a customer should have—

Mr. Speaker: Order. Questions must be reasonably brief.

Mr. Mason: I appreciate the difficulties the hon. and gallant Gentleman has mentioned, but it is not for me to issue a diktat to customers as to what they should do regarding directory or ex-directory numbers.

Telephone Kiosks (Taxicab Advertisements)

Mr. Monro: asked the Postmaster-General if he will continue the practice of selling advertising space in telephone kiosks to taxicab firms.

Mr. Mason: I do not sell advertising space in telephone kiosks direct. It is done through a contractor. I propose to seek an acceptable tender for a new contract later this year. If the contract is let there should be no change in the present practice.

Mr. Monro: Is the Postmaster-General aware that that answer will be very acceptable on many housing schemes, particularly, where people use the booths to call up taxis? Will he bear in mind that this is a very useful social service besides producing revenue?

Mr. Mason: I am well aware of that. This is why we intend to continue it.

Oral Answers to Questions — WIRELESS AND TELEVISION

Colour Television Licences

Sir G. Nabarro: asked the Postmaster-General how many colour television supplemental licences are currently in issue; what estimate he has made of the number in issue in 1970 and 1972; and, having regard to the growth potential, what steps he is taking to rationalise the colour television licence with black and white television and radio, in a single uniform annual charge; and whether he will make a statement.

Mr. Mason: At the end of March 1968, 20,400 colour television licences, which of course also authorise the use of black and white television and of sound radio, had been issued. Estimates made by industry of set sales suggest that this figure might grow to 625,000 by the end of 1970 and about one and a half million by the end of 1972. I would not wish to prejudge the issue but prima facie these figures do not suggest that the proportion of viewers with colour sets will be sufficiently large to justify abolishing the differential licence fee.

Sir G. Nabarro: Would not the right hon. Gentleman agree that it is confusing, discriminatory and undesirable to have this duality of licence fee as between black and white on the one hand and colour on the other? Would he consider, at any rate in principle, consolidating the position at an early date, perhaps within 18 months?

Mr. Mason: The hon. Gentleman has planted a thought in our minds, but perhaps it is a somewhat earlier thought than might have been suggested. I think that the licence differential between monochrome and colour will have to be considered. It will have to be done at some time in the future.

Mr. Mawby: Is the right hon. Gentleman aware that many people in various parts of the country believe that the principle of differential charges should be extended rather than reduced because of the differences in reception? Will he bear that in mind?

Mr. Mason: That is an indication of how easily the House, and particularly hon. Gentlemen opposite, could be divided on this issue.

Mr. Dobson: Would not my right hon. Friend agree that one of the problems in this case is that rather than have a licence differential between colour and monochrome he should be stimulating the manufacture of colour television sets in larger numbers in an effort to keep down the cost of these sets?

Mr. Mason: I appreciate what my hon. Friend says.

Mr. Bryan: Is the right hon. Gentleman aware that if he does not at some time discontinue this differential licensing arrangement we shall gradually drift into a position in which a £10 licence will become general as colour television becomes more general?

Mr. Mason: I am aware of that.

Licence Fees

Mr. Bryan: asked the Postmaster-General if he will give an undertaking that future changes in the price of the broadcast receiving licence will be referred to the National Board for Prices and Incomes.

Mr. Dickens: asked the Postmaster-General if he now proposes to raise the licence fee for radio and television.

Mr. Mason: I cannot anticipate any decision about the level of licence fees, nor what measures might be decided on in examining the case for any future changes.

Mr. Bryan: Is the right hon. Gentleman aware that that is not what I asked? I asked whether this matter would be put before the Prices and Incomes Board.

Mr. Mason: I think that the case for presentation to the Board will have to be considered nearer the time.

Mr. Dickens: Would my right hon. Friend confirm that the British licence fee is the lowest in any country in Western Europe? Would he note that there would be strong opposition from this side of the House to any proposal to introduce commercial radio or television on the B.B.C. in preference to an increase in the licence fee or any other source of public revenue?

Mr. Mason: I am aware of that, but the House should know that the basic source of the B.B.C.'s financial troubles is that the Conservative Administration in 1962 authorised the Corporation to undertake massive new commitments on the understanding that it would be afforded sufficient income to finance them, and they never carried out that policy.

Performers (Fees)

Mr. Brooks: asked the Postmaster-General whether he is satisfied that the fees for appearances and performances on radio and television meet the criteria of the Government's incomes policy; and if he will make a statement.

Mr. Mason: Both the B.B.C. and the independent television companies invariably clear incomes policy aspects with the Department of Employment and Productivity when conducting negotiations about general rates of fees. It is difficult to set standards for fees for individual performances because circumstances vary so much, but the Government have made it clear that the call for substantial restraint over the next two years is intended to apply to all incomes.

Mr. Brooks: Dealing with the particular cases, is my right hon. Friend not aware that excessively large fees appear to be paid to those whose notoriety is more impressive than their talent? In view of this, are the Government not accepting that their policy is not applicable to such star performers?

Mr. Mason: They do appear to be highly paid and are no doubt highly taxed, although that is not necessarily the answer. If my hon. Friend has individual cases in mind and will put them to me, we have the right to put them to the Prices and Incomes Board.

Dr. Winstanley: Would the right hon. Gentleman agree that, if there is a case


for a reduction in the high fees earned by some performers, there is also a case for an increase in the low fees earned by others?

Mr. Mason: This is not necessarily a question for me, but if hon. Members have individual cases, we will see whether they get referred to the N.B.P.I.

Sub Judice Cases

Mr. John Lee: asked the Postmaster General if he will direct the British Broadcasting Corporation to refrain from broadcasting programmes the context of which is prejudicial to or contemptuous of matters that aresub judice;and in view of the action of the Corporation during the recent Richardson case, if he will dismiss the Chairman of the Corporation.

Mr. Mason: No Sir. The need to avoid such broadcasts is well understood in the B.B.C. This one happened because owing to a most unfortunate error the B.B.C. wrongly thought that all Richardson's appeals had been concluded. I know that the Chairman of the B.B.C. and the staff concerned share the grave concern of hon. Members and myself over the error.

Mr. Lee: As this was neither the first nor the last time that such a thing has happened—indeed, has there not been a gross abuse of this kind since, in a case where an appeal was pending?—would my right hon. Friend not whisper loudly in the Chairman's ear that any more incidents of this kind will not be tolerated, and, if they do happen, would he dismiss the Chairman and his egregious Director-General?

Mr. Mason: In view of the Richardson case, I have seen the Chairman and he has apologised to the Attorney-General any myself. He was perturbed about it. It was a stupid mistake. All concerned are aware of it, and I hope that the House will let it rest at that.

Mr. Stratton Mills: Would the right hon. Gentleman assure us that, before putting cut any other programmes like this, the B.B.C. will take full legal advice?

Mr. Mason: It was because of the mistake of a legal mind that this came about.

Mr. Paget: Why should we be gagged because an appeal is under way? Is it imagined that something said on the B.B.C. will affect Appeal Court judges? If something out of turn is said, can they not be sued for libel?

Mr. Mason: I would disagree with my hon. and learned Friend, as, I am sure, would the House. We cannot allow these trials on television before a mass audience before the person himself has had a chance to appear in court.

Elderly Persons (Licence Fees)

Captain W. Elliot: asked the Postmaster General if he will exempt elderly pensioners and people on small fixed incomes from any further increase in the television licence fee, and also make regulations to enable people to buy a television licence for periods of three and six months as well as for 12 months.

Mr. Mason: No decision has been taken to increase the licence fee. Much as I sympathise with the hon. and gallant Gentleman's motives exemption would create serious anomolies. Short term licences would call for more staff and add materially to the costs of the licensing service.

Captain Elliot: Would the right hon. Gentleman not agree that television is a great boon to many elderly people and that, for many of them, relief from expensive television licence fees is just as important as relief from expensive bus fares? Would he seriously consider that? Second, in spite of the increased expense, would he not see whether he could spread the cost of the licence fee over a longer period, since the necessity to produce £5 and even more all at once does cause hardship?

Mr. Mason: The original Question asked me to fix individual licence fees, of which there are 17½ million, so the hon. Gentleman can imagine the time which would be consumed, and the expense and, above all, the work by the Civil Service which would be involved. As to cheaper television licences for old people, I beg the House to remember on this point that old people who have not got a television would receive no benefit at all, and they are probably more needy than those with sets.

Oral Answers to Questions — ECONOMIC SITUATION

Mr. Marten: asked the Prime Minister whether he will now make another television broadcast to the nation on the economic situation.

The Prime Minister (Mr. Harold Wilson): The Answer I gave to a similar Question by the hon. Member on 5th March still applies, Sir.

Mr. Marten: Will not the Prime Minister reconsider that Answer, as the effects of devaluation are still, in some people's minds, not very clear? In particular, will the right hon. Gentleman explain to the nation how the Government's policy of a nil norm in their wages policy White Paper reconciles itself with the trade unions' rejection of that policy yesterday?

The Prime Minister: I have answered very many Questions about the criteria for wage settlements. The hon. Gentleman will no doubt have seen that my right hon. Friend the First Secretary of State made a very lengthy speech on this subject this morning. I would commend him to study that speech.

Sir G. Nabarro: Does the Prime Minister recognise that the nationalised industries themselves are in the van today of breaking all the Government-imposed norms, notably the Post Office with nine times and seven times respectively the norm imposed by the Government for increased postal charges? How can wages be held steady in circumstances of this kind?

The Prime Minister: The hon. Gentleman will be well aware that the publicly-owned industries have been the subject of references to the National Board for Prices and Incomes, and the need for the increases arises from meeting the target which was set by both the previous Government and ourselves for the return on capital. The hon. Gentleman will be equally well aware that, if the same rate of productivity increase obtained in private industry as obtains in most of the nationalised industries, we would not be facing any of these problems.

Mr. Heath: It is now apparent that there is an open conflict between the

Trades Union Congress and the Government in the matter of prices and incomes. The Trades Union Congress, in its letter to General Secretaries, points out that two divergent policies cannot exist together, with a 5 per cent. norm, which is the T.U.C.'s, and a 3½ per cent. ceiling, which is the Government's. Will the Prime Minister now tell the House what is the Government's attitude to this?

The Prime Minister: Yes, indeed. I dealt with it very fully in a speech I made last week to the Scottish T.U.C. I made it clear then that, although we shall seek to co-operate with the Trades Union Congress and its vetting machinery, the norm, the figures and the criteria laid down in our White Paper must be applied; and they will be applied as a result of the legislation we are bringing before the House.

Mr. Orme: Is not the Prime Minister aware that there is a great divergence of opinion about this matter? In fact, the C.B.I. talks about a nil norm, and the T.U.C. talks about a 5 per cent. norm. Does not the Prime Minister agree that the policy which he is advocating and which the First Secretary of State today advocates will not work and that he should go in for the T.U.C's policy of expansion and development?

The Prime Minister: The policy is for expansion and development. That was the theme of my right hon. Friend's speech this morning at Eastbourne. I am glad that my hon. Friend has moved so far in the matter of prices and incomes policy that at least he now accepts the T.U.C's policy.

Mr. Heath: If the Prime Minister cannot state the Government's attitude at present towards this conflict, will he at least make clear, as his hon. Friend asked, that the T.U.C. has a 5 per cent. norm and the Government have a nil norm?

The Prime Minister: We have made clear in the White Paper exactly what our position is. The right hon. Gentleman is perfectly capable of reading it for himself. We have said that the nation cannot afford, on our calculations, increases of more than 3½ per cent., and that these have to be justified by the


criteria laid down in the White Paper. There are no automatic increases, as is made clear in the White Paper. Further, it is slightly unfair to the T.U.C. to suggest that there will be a norm of 5 per cent., in the sense of that being an average, with some higher and some lower.

Mr. Marten: May I raise a very small point of order, Mr. Speaker? When the Prime Minister answered my supplementary question, instead of giving a direct answer which he knew, he referred me to a speech made at Eastbourne this morning by one of his colleagues. May we have as a trend a direct answer to the question instead of the questioner being referred to a speech made in the morning?

Mr. Speaker: Order. That is not a point of order.

Sir Knox Cunningham: On a point of order. If the Prime Minister refers to a speech which is not available to Members should not it be placed on the Table of the House?

Mr. Speaker: Order. I imagine that in the present circumstances that would have been impossible.

Mr. Heath: Further to that point of order. If you have ruled, Mr. Speaker, that it would not have bean possible to place it on the Table of the House, how is the Prime Minister right in referring to a speech of which hon. Members can have had only limited knowledge?

Mr. Speaker: Order. We are still on a point of opinion rather than of order.

Oral Answers to Questions — DEPARTMENT OF ECONOMIC AFFAIRS

Q2. Mr. Wyatt: asked the Prime Minister whether he will now make a statement on the future functions of the Department of Economic Affairs.

The Prime Minister: I would refer my hon. Friend to the answers I gave to Questions on 23rd April.—[Vol. 763, c. 26–71]

Mr. Wyatt: Arising out of that totally expected reply, will my right hon. Friend warn the Minister who has now taken over the incomes policy part of the De-

partment against suggesting that it is easy to make productivity agreements which can go beyond the 3½ per cent. level? Is he aware that to negotiate a genuine productivity agreement takes something like six to nine months, which cannot possibly have any bearing on the Government's incomes policy over the next nine months?

The Prime Minister: My answer to that entirely predictable supplementary question is that the position is seen by my right hon. Friend exactly in these terms—that productivity agreements must be genuine and guaranteed. I do not accept that in every case they take six, eight or nine months. In some cases, for example, in what has now been worked out on the railways following the meeting at Downing Street in February, 1966, they take considerably longer. But there are other obvious productivity agreements, to be worked out at either national or local level, which can be worked out much more quickly if there are changes in the restrictive practices at present prevailing.

Mr. Heffer: Is not my right hon. Friend aware that it is impossible to negotiate productivity agreements for large sections of workers in this country because they are not in a position to be concerned actually with productivity in the same sense as workers in other industries are? Is it not clear that this leads to a great deal of confusion and a lot of hardship, particularly for the lower-paid sections of workers who cannot be involved in productivity agreements of that kind?

The Prime Minister: My hon. Friend is quite right. It has been said many times and understood by everyone that, for example, in large sections of clerical work, in the social services, in hospitals and among such workers as signalmen on the railways, it cannot be done on the basis of productivity—

Mr. Heffer: And the Liverpool buses?

The Prime Minister: I do not intend to add anything on that question at the moment—but the more we can get productivity agreements and get national productivity up, the more we shall have a social dividend available over the next year or two years to help meet the needs of those who cannot have individual productivity agreements.

Mr. Maudling: The Prime Minister said that his hon. Friend's supplementary question was predictable. In that case, why could he not answer the question about those people for whom productivity agreements could not be achieved in six or nine months?

The Prime Minister: The question was, "Was I aware…" or "Would I make clear…" to my right hon. Friend that these things could not be worked out in less than that period. I do not accept it. There are many which could be worked out very quickly indeed. The question of how long it takes is very much a matter of the attitude to the negotiations. If there is a genuine desire for productivity, we can have productivity agreements of a guaranteed character very quickly.

Oral Answers to Questions — ARGENTINE AND FALKLAND ISLANDS

Mr. Wyatt: asked the Prime Minister whether he will invite the Head of the Government of the Argentine to London for discussions on matters of mutual concern.

The Prime Minister: President Ongania would be welcome in London at any time, but I believe that matters of mutual concern to the two countries are being satisfactorily handled through normal diplomatic channels and by direct contacts between British and Argentine Ministers whenever necessary.

Mr. Wyatt: Will the Prime Minister confirm that he has told the President of the Argentine that there is no question whatever of our handing over sovereignty over the Falkland Islands; and, if that is so, will he immediately bring to an end the secret talks which have been going on about the Falkland Islands because, if we will not hand over sovereignty over them, there is nothing whatever to discuss?

The Prime Minister: I have had no direct contact with the President of the Argentine, so I could not have made a statement of that kind. But the position has been made perfectly clear, with my agreement, by my right hon. Friend the Foreign Secretary to the Argentine Ambassador. What the Argentine Ambassador was clearly told in March was said

to the House at an early hour of the morning during the debate on the Consolidated Fund Bill. I have nothing to add to what my right hon. Friend said.

Viscount Lambton: Has the Argentine declined to sign a contract for the purchase of ships from Scottish dockyards unless there is agreement with the Argentine over the Falkland Islands?

The Prime Minister: I have not heard of that, but I should be glad to make inquiries about it. It is a fact that, for a time, a number of contracts with exporters from this country, private exporters in nearly every case, were held up because of the ban on the importation of meat from the Argentine. There is no doubt that there was a semi-boycott of that kind. I have not heard of the particular case to which the noble Lord refers, but I shall be glad to look into it.

Mr. Boyd-Carpenter: If, as the Prime Minister says, there is no question of handing over the Falkland Islands to the Argentine, what has been the point of holding the discussions?

The Prime Minister: There have been a number of questions involved in the talks, and there is no doubt that the Argentine Government want us to hand the islands over. They have now had their answer.

Oral Answers to Questions — "BACK BRITAIN" CAMPAIGN

Mr. Onslow: asked the Prime Minister what has been the total cost to date of Her Majesty's Government's support for the "I'm Backing Britain campaign".

The Prime Minister: The Government have welcomed the campaign and have given it general support. As to the cost, the House already knows of the cost of the special postmark used in February and borne by the Post Office. No other costs can be separately identified and no direct financial contribution to the campaign has been made by the Government.

Mr. Onslow: If the Prime Minister has refreshed his mind about his speech at Burnley on 8th January, when he said that every directors' meeting should begin with an item on the agenda asking, "Are


we doing all we can for Britain?", will he say whether such an item has ever appeared on the agenda of his Cabinet, and, if it has, explain why it has not led to the Government's resignation?

The Prime Minister: Unfortunately, what seemed to be the pay-off line missed me. I could not hear. Perhaps the hon. Gentleman would care to repeat that part of his supplementary question. In any event, he might begin by getting right the facts of what I said at Burnley. I said that the first item at every boardroom meeting should be, "What are we doing to increase exports?". This is, I think, obligatory on every firm in the country which can do it.

Oral Answers to Questions — RHODESIA

Sir C. Taylor: asked the Prime Minister if he will make a statement on the recent developments in Rhodesia.

Mr. Hastings: asked the Prime Minister whether he will make a further statement on Rhodesia.

The Prime Minister: I would refer hon. Members to the speeches of my right hon. Friend the Commonwealth Secretary and myself in the debate on 27th March and to the Answer given yesterday by my right hon. Friend the Foreign Secretary to a Question by the right hon. Gentleman the Member for Kinross and West Perthshire (Sir Alec Douglas-Home).—[Vol. 761, c. 1545 and 1662. Vol. 763, c. 232]

Sir C. Taylor: Does not the Prime Minister agree that the instructions given by the Government to Lord Caradon at the United Nations will further irritate the many reasonable people in Rhodesia who still hope for an honourable settlement?

The Prime Minister: No, Sir, I do not agree at all. That point was dealt with yesterday by my right hon. Friend the Foreign Secretary at Question Time. What I cannot understand is that hon. Members who have complained that we were bearing the whole burden of sanctions now complain when we propose that it should be extended to other people and we should all work to make them successful; and still less can I

understand it when right hon. Gentlemen and the party opposite have made clear their support of the sanctions policy.

Mr. Hastings: Referring to the Foreign Secretary's statement yesterday, will the Prime Minister make clear who is to report on the political affiliations and loyalties of British people in Rhodesia? Is the residual mission now to be reduced to spying on British passport holders? If not, who will report on them?

The Prime Minister: There is abundant evidence on the breaking of sanctions and public statements made by these people. There is no question of spying. My right hon. Friend stated yesterday what the position would be. It is intolerable that people who, nominally British citizens, are actively aiding illegality should come and go as they choose between this country and Rhodesia. That is the reason, or one of the reasons, for the action we have taken.

Mr. John Lee: With regard to those who are actively aiding illegality, will my right hon. Friend instruct the Attorney-General to take proceedings against any such when they are within our jurisdiction?

The Prime Minister: My hon. Friend must be singularly unaware of the constitutional position of the Attorney-General, who acts in a quasi-judicial position in these matters and is not subject—nor have any of his predecessors ever been—to instructions either from the Prime Minister or from other political authority.

Mr. Biggs-Davison: Is it not sad that, when Mr. Ian Smith has publicly taken a stand against racialism—[Interruption.]

Mr. Speaker: Order.

Mr. Biggs-Davison: Is it not sad that when Mr. Ian Smith has publicly taken a stand against racialism, which he did in his recent speech on the subject, and when the Constitutional Commission has rejected apartheid, the Government should propose vindictive measures at the United Nations which can serve only to give fresh impetus to white extremism in Rhodesia?

The Prime Minister: It is clear that in this House there are very different standards on how "racialist" is to be interpreted. So far as Mr. Smith and those in control in Rhodesia are concerned, the test is not what they say about apartheid or anything else. It is a question of whether they, or for that matter the Constitutional Commission, accept the six principles and give effect to them. So far, as I have made clear to the House, they have been moving further and further away from honouring the six principles. That is one of the difficulties we have had.

Mr. Paget: How does my right hon. Friend propose to exclude United Kingdom citizens from this Kingdom? Is he aware that conduct displeasing to the Government is not an answer to a writ of habeas corpus, and that this would require legislation removing from the subject not only rights conferred by law but rights conferred by the Universal Declaration of Human Rights?

The Prime Minister: I am surprised that so warm a supporter of the régime in Rhodesia can even talk about the Declaration of Human Rights. In the context of this question, my hon. and learned Friend is talking about people who are acting illegally and supporting an illegal régime which no one in the House should be supporting.

Mr. Maudling: The Prime Minister's hon. and learned Friend was talking about the law and putting very definite questions. Why will not the Prime Minister answer them?

The Prime Minister: My hon. and learned Friend was referring first to the Declaration of Human Rights. I gave my answer to that. Second, so far as the law is concerned, Rhodesia is in a state of illegality. It is our duty to deal with that by every civilised means within our power.

Mr. Woodburn: Can my right hon. Friend say whether Her Majesty's Government have done anything to prevent Mr. Smith's régime from taking reasonable steps to bring Africans to a state where they are fit to play a part in the Government? What is stopping Mr. Smith from introducing all the demo-

cratic conditions that he claims he believes in?

The Prime Minister: Of course, nothing at all. So far from preventing him from doing this, we offered, as did our predecessors, very substantial aid to help with an educational programme that would enable more Africans to qualify for the vote. He made it plain in reply, as did some of his colleagues, that if speeding education meant leading to more people having the vote he would slow it up.

Mr. Sandys: If the Prime Minister is not prepared to resume negotiations with Mr. Smith, will he say what he considers will be the useful purpose of imposing additional sanctions?

The Prime Minister: This was explained at very great length by my right hon. Friend and myself in the debate. We all understand and regret the reasons why the right hon. Gentleman could not be here to hear what we said. The position is that the régime, particularly those members of it with whom we could never negotiate after their actions of the past few weeks, have moved further away from the "Tiger" proposals. We have said that we are prepared, given a substantial change of circumstances to justify our going back to our Commonwealth colleagues, to negotiate with those in Rhodesia who are prepared to accept the six principles and the spirit of the "Tiger" agreement. This still remains our position, but so far there have been no signs to justify the opening of such negotiations.

Mr. Thorpe: May I revert to the question about United Kingdom citizens in Rhodesia. We opposed the Government's measures to exclude United Kingdom citizens from Kenya who wish to come to this country, exercising their rights of citizenship. Surely in logic United Kingdom citizens in Rhodesia should equally be allowed to come to this country, but if they are in rebellion does not it follow that as a matter of law they must be prepared to face the legal consequences of their rebellion?

The Prime Minister: This is not so much a question of individual citizens. The House as a whole approved the policy of sanctions, and we are trying to make


it more effective. This includes the virtual outlawing of those who support the régime and those who travel abroad for the sake of breaking sanctions. We think that this is necessary to make the sanctions work. It will now obviously be a long haul, but I do not think that anyone in the House could justify our going back on the course we set ourselves or entering into a position of surrender to illegality and some extremely grave actions committed by the régime, which were condemned by the whole House a few weeks ago.

Mr. Heath: If the resolution is passed by the Security Council, do the Government propose to introduce legislation to change the law?

The Prime Minister: There is no intention of changing the law—[Interruption.] I am sorry, I think that there will be Orders placed before the House. At this moment I am not in a position to say exactly what they will be.

Hon. Members: Why not?

The Prime Minister: Because we have tabled a resolution in the United Nations which is still subject to discussion. [Interruption.] We have thought out very carefully what it means and spent a lot of time on it, but I am not in a position to say what it means in terms of legislation. The House will see the legislation when it gets it. What hon. Gentlemen opposite fail to realise is the very great problems and difficulties we faced and my noble Friend faced in New York with the very strong pressures from our fellow Commonwealth countries, which feel very strongly about this question of human rights, whatever hon. Gentlemen opposite feel, and also the condemnation of virtually the whole of mankind. For ourselves to have put forward this much more moderate resolution is something which hon. Gentlemen at least should support.

Sir C. Taylor: On a point of order. In view of the unsatisfactory reply and the resolution tabled at the United Nations by the Government, I wish to give notice that I shall seek to raise this matter on the Adjournment of the House at the earliest opportunity.

LOCAL AUTHORITY HOUSING (RENTS)

The following Written Question stood upon the Order Paper:

Mr. WILLEY: To ask the Minister of Housing and Local Government whether he has yet received a report from the National Board for Prices and Incomes on increases in council house rents.

The Minister of Housing and Local Government (Mr. Anthony Greenwood): I will, with permission, answer Written Question No. 14.
My right hon. Friend the Prime Minister announced at the time of devaluation that the Government were determined to protect the poorer sections of our people from the effects of rising prices. Rents are a large item in the family budgets of workers, and the very sharp increases in rents made by some local authorities clearly conflicted with the overriding need for restraint on prices and incomes.
The Government therefore referred to the National Board for Prices and Incomes last December the question of increases in rents of local authority housing. At the same time, we advised all authorities to moderate and phase any necessary rent increases, and also to adjust rents to the needs of tenants by means a rent rebates—that is, using subsidies to help those who need help most. The great majority of local authorities have followed this advice and have done as much as they can to keep rent increases within reasonable limits.
The Board's report has now been received by my right hon. Friends the First Secretary and the Housing Ministers associated with the reference. The Report is published today by Her Majesty's Stationery Office. Copies have been placed in the Library and are also obtainable from the Vote Office.
The Government welcome the Report, which strongly supports the advice we had already given to local authorities on the need for moderation and phasing of rent increases. The Board recommends that, where rent increases, arising from increased costs, are necessary, increases in average weekly standard rents should not exceed 7s. 6d. in any one year, subject also to moderating any increases above


the average, and that authorities wishing to provide for a larger average increase should be required to seek the permission of the Housing Departments.
The White Paper on Productivity, Prices and Incomes Policy in 1968 and 1969 (Cmnd. 3590) emphasised that it is the Government's intention to introduce legislation requiring all local authorities to notify Ministers of proposed rent increases and enabling Ministers to direct local authorities to moderate or phase rent increases which they regard as too high in present circumstances.
The Government propose that the new powers for which they intend to legislate should be applicable to any rent increases which took effect on or after 1st April this year and to increases referred to the National Board for Prices and Incomes. We are issuing further guidance to local authorities on these matters.
Under the legislation which the Government will propose to Parliament, Ministers will be able to give directions to any local authority proposing increases. Authorities will be advised that Ministers will not normally accept increases in average standard rents exceeding 7s. 6d. a week in any one year as the Board recommends. We shall also advise local authorities to limit the maximum weekly increase for any individual dwelling to 10s. a week in any one year.
Some authorities have made or proposed rent increases since 1st April which substantially exceed these limits. We are asking these authorities, and those referred to the National Board for Prices and Incomes, to review their increases in the light of the new advice.
In order to improve relations between local authorities and their tenants, the Board suggests the removal of the requirement to serve notice to quit at the same time as notifying rent increases—a matter already under review by the Law Commission—and the setting up by local authorities of a system for dealing with complaints from tenants. We welcome these proposals, which will be discussed with the local authority associations, together with other suggestions which the Board makes on local authority housing finance.
It is important that tenants should understand that all rents at present in

force, including any increases, will remain payable unless and until the responsible Minister directs the local authority to revise its rents. Any such reduciton will take effect from a future date specified in the direction.
We are confident that local authorities will recognise the need to contain costs and to moderate rent increases. The Board's Report strongly endorses this policy, which the Government regard as an essential component of a successful and equitable prices and incomes policy.

Mr. Willey: I thank my right hon. Friend for that statement. Is he aware that it fully justifies the reference to the Board? I am sure that the statement is generally welcome to the House. What steps will be taken administratively, meanwhile, pending statutory provisions? Can he, if necessary, ensure that the statutory provisions will be retrospective to see that no increase before they are introduced is enforceable?

Mr. Greenwood: I am obliged to my right hon. Friend. The Report emphasises the need for moderating and phasing rent increases in the way the Government have suggested. So far as retrospection is concerned, I have made the position clear in my statement. We are issuing guidance to local authorities on how to interpret the powers for which we shall be asking Parliament in the very near future.

Mr. Rippon: Is the right hon. Gentleman aware that rising rents, like all rising prices, are due to the failure of the Government's economic policy, to devaluation and to the highest rates of interest in history? Will he, therefore, agree that it is important that there should be no interference with the statutory responsibility of local authorities to balance their housing revenue accounts in accordance with the interests of the rate payers as well as of the tenants?
Will the right hon. Gentleman also confirm that the Government still adhere to the policy of charging reasonable rents in both the public and the private sector? If that is still the policy, does not it follow that reasonable rents must be determined by each authority on the merits of each case and not by reference to any arbitrary standard?

Mr. Greenwood: There can be no arbitrary standard. But it is clear that


a number of local authorities have been increasing rents by two or three times what is reasonable in existing circumstances. The right hon. and learned Gentleman must know perfectly well that the increased costs of local authority building are partly due to improved standards for local authority accommodation and partly because of the high-rise building which became so fashionable when he was Minister of Public Building and Works.

Mr. J. T. Price: Is my right hon. Friend aware that we on this side deplore the need for the constant rises in rents just as strongly as do our constituents, but that, nevertheless, we welcome his statement as some indication that the Government are aware of the serious situation as far as the rent payers are concerned? Does not he agree that, if the Government had not already come to the aid of the local authorities by increased subsidies and by an increased drawback of 10d. in the £ on rates through additional grants from Government funds, the rent increases already complained of would have bene much more severe than today?

Mr. Greenwood: Yes, Sir. My hon. Friend has shown his usual perspicacity. The increased subsidy means that each local authority house built last year is getting a subsidy of £83 a year as against £24 a year provided under the 1961 Act. There is, in addition, the 10d. domestic subsidy, to which he has referred, and also the rate rebates, which help the position of many poorer paid people.

Dr. Miller: While welcoming in general the statement and the proposals for further action, may I ask my right hon. Friend whether he is aware that 7s. 6d. per week is a substantial amount, particularly in the development areas and especially in Scotland? Will he under-take to ensure that local authorities realise that this is a maximum and not a general amount which they should apply?

Mr. Greenwood: I appreciate that point. It is the wish of my right hon. Friends the Secretary of State for Scotland and the Secretary of State for Wales and myself that this figure should be a ceiling rather than a floor. But it is important, while realising what my hon. Friend has said about the size of 7s. 6d., to strike a

balance between keeping rents down to a reasonable level and enabling local authorities to go on increasing the number of houses available.

Mr. Boyd-Carpenter: Where a local authority has inherited a large deficit on its housing account and, on a Ministerial direction against an increase in rents, has to add to the burden on the ratepayers, will the Government provide additional funds to compensate the ratepayers?

Mr. Greenwood: This is the sort of situation which every Minister will have to take into account in deciding how to exercise his powers. The right hon. Gentleman is much less than his usual original self in suggesting that only the general rate fund can be used to make contributions of this kind. It is possible to use existing balances in the housing revenue account and balances in the equalisation account; and to take advantage of the higher rate of accumulation on housing capital repayments, as we enabled local authorities to do last year. It is also possible to make economies in management. All these are available as well as further contribution from the general rate fund.

Mr. Julius Silverman: Is not my right hon. Friend aware that an addition of 7s. 6d. a week in rent can mean an increase of 30s. within four years? Does he think this consistent with the prices and incomes policy? A large number of people who are not within the range of any normal rebate schemes will find difficulties in meeting this increase. Will he review the whole question of local government housing finance and the assumptions upon which it is based? Judging by a cursory review of its Report, this has not been completely done by the Board.

Mr. Greenwood: My hon. Friend is perfectly right. A long-term review of housing finance was not within the terms of reference of the National Board for Prices and Incomes. I know the point which my hon. Friend has in mind. It is one of the problems which we are studying in the Ministry of Housing and Local Government as part of our long-term review of housing finance.

Mr. Lubbock: Is the right hon. Gentleman aware that many local authorities are seeking rent increases from their


tenants—they may not average more than 7s. 6d. a week—because they are trying to build up too high a balance on their housing revenue accounts? Would he be prepared in these cases to use the powers of direction to which he referred? Is he aware that the setting up of machinery to enable local authority tenants to make complaints will be greatly welcomed and that it is to be hoped that that will be included in the legislation which he has promised?

Mr. Greenwood: I agree on both points. A number of recent sweeping increases have arisen because local authorities have been looking too far ahead and have been trying to build up balances beyond what is a reasonable level. Certainly, we would use our powers, if necessary, in cases of that kind. I am grateful for the welcome given by the hon. Gentleman to our proposal to have, as it were, appeals machinery for council house tenants. I believe that this is a tremendous step forward and that it will improve the standing of local authorities with the people whom they represent.

Mr. Bellenger: Can my right hon. Friend give an indication of the general reaction of housing authorities to his suggestions about rent rebates?

Mr. Greenwood: The reaction generally has been very favourable to the rent rebates circular which we issued last summer, and now about 75 per cent. of council house tenants are covered by rent rebate schemes. The schemes are not uniform and they vary in quality from one local authority to another.
Secondly, we have had a satisfactory response to our request, made in December, that local authorities should phase and moderate rent increases. Of the 300 increases notified since December of last year, about 60 would come within the terms of the proposals that we are now making.

Mr. Rippon: Has the Minister consulted the Chancellor of the Exchequer and local authority associations about his quite extraordinary proposal that local authorities should deal with this matter by just dipping their fingers into the till and drawing on their reserves? Is he aware that many Conservative local authorities have found that their Socialist predecessors have already robbed the till

—[HON. MEMBERS: "Oh."]—for example, in Birmingham?

Mr. Greenwood: I do not think that the last point made by the right hon. and learned Gentleman calls for a reply. I am in the closest touch with my right hon. Friend the Chancellor of the Exchequer. Two or three weeks ago I discussed with the local authority associations the main principles of the proposals which I have put before the House.

Mr. Simon Mahon: Is my right hon. Friend aware that one of the most important aspects of his statement is that which has rather little to do with money? Will he accept from me the gratitude of millions of people in having removed the notice to quit, something which has been an affront to millions of working-class people in Britain for very many years?

Mr. Greenwood: I am obliged to my hon. Friend for that comment. I know of the work which he has done in Bootle to help people in bad housing conditions in that town. The point he raised has been something which has disturbed many of us for a long time. The notice to quit can have an extremely painful effect, particularly on old people. There is no need for this practice to continue. It would, except for some authorities, need legislation to put an end to it; but in the meantime we will give guidance to local authorities about the desirability of giving adequate advice to tenants about what the notice to quit really means.

Mr. Goodhew: By what magic formula did the right hon. Gentleman arrive at 7s. 6d. as being a reasonable increase? Is he aware that on a rent of 15s. it represents a rise of 50 per cent., while on a rent of 75s. it represents a rise of 10 per cent.?

Mr. Greenwood: I congratulate the hon. Gentleman on his arithmetic. I hope that he will carefully study the Report of the National Board for Prices and Incomes, because the figure of 7s. 6d. was suggested in that Report. In fact, it fell in with my own thinking and that of my right hon. Friends on this matter. Although 7s. 6d. may represent an increase of 50 per cent. on a rent of 15s., it is a great deal less than, for example, an increase of 45s., as has been proposed in some cases recently.

Mr. Frank Allman: Would my right hon. Friend agree that he has had to intervene to stop certain big cities, now Conservative controlled, from axing their housebuilding programmes as a means of preventing rent increases, a wicked thing to do?

Mr. Greenwood: I am not in possession of powers to do quite what my hon. Friend has suggested, but his remarks emphasise the need for striking a balance between keeping rents reasonably low and not discouraging local authorities from getting on with their building programmes.

Several Hon. Members: Several Hon. Members rose—

Mr. Speaker: Order. We must move on.

Mr. Bruce-Gardyne: On a point of order. Are you aware, Mr. Speaker, that when the Minister referred to the local authorities which had been referred to the National Board for Prices and Incomes, he was referring to a number in Scotland? Are you aware that, despite this, the right hon. Gentleman has not made it clear whether or not his statement applies to Scotland?

Mr. Speaker: Every hon. Member whom I did not call to put a supplementary has a very good reason for being called, but I cannot call all hon. Members.

IMMIGRATION OFFICERS (PUBLIC STATEMENT)

Mr. Winnick: (by Private Notice) asked the Secretary of State for the Home Department whether he will make a statement on the public statement made by immigration officers about coloured immigrants to the United Kingdom.

Sir C. Osborne: On a point of order. Is this permitted, Mr. Speaker, since I have two Questions on the Order Paper on this very issue?

Hon. Members: Oh.

Mr. Speaker: Order. I appreciate the seriousness of the hon. Gentleman's question, which is a legitimate one. The matter is covered by the recent Report of the Select Committee on Procedure.

The Joint Under-Secretary of State for the Home Department (Mr. David Ennals): My right hon. Friend has set in hand an immediate investigation. The purpose of the investigation is to discover the full facts, and to determine whether there are grounds for disciplinary proceedings. Pending completion of the investigation, one officer has been suspended from duty.
Immigration officers, like all other civil servants of their rank, are required to abstain from expressing views in public on matters of political controversy.

Mr. Winnick: Would my hon. Friend agree that it is absolutely vital that immigration officers should be seen on all occasions to be impartial in the important duties which they carry out? Is not some appeals machinery for immigrants even more important now? Would my right hon. Friend further agree that the various forms of negro baiting that we have seen in recent days has been due entirely to the notorious speech of the right hon. Member for Wolverhampton, South-West (Mr. Powell) in trying to make racialism respectable in Britain?

Mr. Ennals: I will not reply to the last part of my hon. Friend's question. It is important that immigration officers should refrain from saying anything which might cast doubt on their ability to discharge their official duties impartially.
The Government have accepted in principle the recommendation made by the Wilson Committee for the introduction of an immigration appeals system. My right hon. Friend informed the House on 28th March that an immigration appeals Bill was high on the list of Bills being considered for next Session.

Mr. Maudling: While it is clear that the rules of the Civil Service must be maintained—we do not doubt that for a moment—does not the hon. Gentleman realise that his Answer is totally inadequate in relation to this extremely important question? Is he aware that there is a great deal of public concern about this whole problem, arising from a genuine belief that the immigration controls are being widely mishandled—[An HON. MEMBER: "Scoundrel."]—that a great deal of the present problem, which is of such seriousness, depends on


the controls being properly run—[HON. MEMBERS: "Disgraceful."]—and that the public will feel that there is clear evidence—

Hon. Members: Sit down.

Mr. Speaker: Order. We want to hear both sides of any question.

Mr. Maudling: As the public will feel that this is evidence that the immigration controls are not being properly run, will the Minister make a statement on this vitally important point?

Sir G. Nabarro: On a point of order. Four times I have heard the hon. Member for Liverpool, Walton (Mr. Heffer) shout "Scoundrel" at my right hon. Friend the Member for Barnet (Mr. Maudling).

Mr. Heffer: Mr. Heffer  rose—

Mr. Speaker: Order. If the hon. Gentleman did use the word "scoundrel" he must withdraw it.

Mr. Heffer: If you so direct me, Mr. Speaker, I will withdraw it in the interests of the House, but I have no intention of accepting a position in which right hon. Members can say things which inflame a situation which is already difficult enough.

Mr. Speaker: Order. The hon. Member has rights to his opinion, but all I am concerned about is his withdrawal. It has been made. Mr. Shinwell.

Sir C. Taylor: Further to that point of order. I think that it has been ruled by a number of your predecessors that a withdrawal must be unreserved. This was a withdrawal, with the greatest respect—

Mr. Speaker: When a withdrawal is made it should be accepted. The Chair has accepted it and I think that the House will accept it.

Mr. Ennals: I was surprised at the tone of the question by the right hon. Member for Barnet (Mr. Maudling). We are concerned here with the long-standing traditions of impartiality of the Civil Service. That is the issue.

Mr. Maudling: Mr. Maudling rose—

Hon. Members: Sit down.

Mr. Shinwell: Mr. Shinwell rose—

Mr. Speaker: Mr. Maudling.

Mr. Maudling: I made it quite clear in my opening words that the rights of the Civil Service must be supported. Of this, there is no doubt. [Interruption.]

Mr. Speaker: Order.

Mr. Faulds: What a sad decline.

Mr. Speaker: Order. We discussed this question for hours earlier in the week with dignity and decorum. We ought to be able to do so now.

Mr. Maudling: What people concerned with race relations are concerned about, as we on both sides of the House are concerned about, is that the public are told that the immigration controls are not properly run. This is a very serious point. I ask the Minister to make sure that public concern about this should be allayed.

Mr. Ennals: It is a very serious question. One of the reasons why there is public concern is statements which have misrepresented the situation. This must be recognised. Immigration officers have a difficult job to do; this we must recognise, but it must also be recognised that there have been significant changes, which were debated in the House on the Commonwealth Immigrants Act, which dealt with a number of problems concerning dependent children, aged parents and clandestine evasions. Action has been taken by this House to deal with these. The sort of statements sometimes made, that in this country we are facing mass immigration when, in fact, the numbers coming for employment have been strictly reduced, lead to, and sometimes I think are designed to lead to, misunderstandings.

Mr. Heath: Mr. Heath rose—

Mr. Shinwell: Mr. Shinwell rose—

Mr Speaker: Order. The right hon. Member for Easington (Mr. Shinwell) will be called in turn. Mr. Heath.

Mr. Heath: The Under-Secretary said, quite rightly, that he has arranged for an inquiry to be made into the disciplinary aspects of this matter. What my right hon. Friend and my colleagues


are asking is that if immigration officers feel that they have grievances or complaints about the operation of controls for which they are responsible, he will make sure that inquiry is made into these and a report is made in the usual way.

Mr. Ennals: The immigration officers, naturally, have their channels—as any civil servants have—for expressing grievances. There has been substantial contact between Ministers and immigration officers on problems which they face. On 2nd November I spent several hours at London Airport discussing with immigration officers the problems they were facing. As recently as 16th January a number of representatives came and discussed these problems with us, before the 1968 Act. I can assure the right hon. Gentleman that the means of expressing concern are amply met both by the meetings I have spoken of and the proper procedures applied to the Civil Service.

Mr. Shinwell: If there is a channel available to these immigration officers, who are regular civil servants, to make known to the Home Office that corruption exists and there are illegal practices in operation, may I ask whether recently these officers have taken advantage of that opportunity and made such representations? If they have made representations, can my hon. Friend say what the Home Office have done about it?

Mr. Ennals: The only reference I have seen to corruption was a quoted statement in the Press from an unnamed person. My impression was that the references to corruption were the difficulties that are sometimes experienced when immigrants seek to gain entry by illegal means. Certainly, the fact that there have been evasions is something which is well understood in this House and in the Home Office, and it has been dealt with in the controls provided by the 1968 Act.

Miss Lestor: Does not my hon. Friend agree that one of the tragedies of this situation is that this House and people in the country, when talking of immigrants, automatically thinks of colour. The word "coloured" becomes synonymous with "immigrant". Does he not consider that a great service would be

done in the whole field of race relations if we began to discuss immigration in the context of white immigration as well as coloured immigration, bearing in mind that there are far more white than coloured immigrants?

Mr. Ennals: It should be realised that control in immigration offices at both No. 1 and No. 3 buildings at London Airport are dealing with aliens from all over the world as well as with coloured immigrants. My hon. Friend is quite right.

Mr. Thorpe: Is the Under-Secretary aware that one of the most priceless assets in the public administration of this country from which successive Administrations have benefited is the record of utter integrity of our public service? Is he aware that one aspect is that, whatever political views they hold and are entitled to hold in private, they are not allowed to influence or to be extended to the proper discharge of their professional duties? Can he tell us by what precedent civil servants have been justified, when feeling dissatisfaction with their own Department, to express that dissatisfaction in public, and further, that when the precedent was established the Opposition were seen to give that practice support?

Mr. Ennals: I do not think that the House, at this stage, ought to go too far in drawing its conclusions. My right hon. Friend is making a searching inquiry into the allegations. I think that it would be wrong for me to presume what would be the outcome of that inquiry or to prejudice the position of those who are involved in the inquiry.
In answer to the right hon. Gentleman's final question, I was surprised at the attitude of a principal spokesman of the Opposition, which did not seem to recognise that we are dealing here with a matter of great importance concerning the impartiality of servants of the State.

Mr. Heath: In view of what the Leader of the Liberal Party has just said, may I make absolutely plain to the Under-Secretary, as did my right hon. Friend the Member for Barnet (Mr. Maudling), that we consider the Government to be absolutely right in having an inquiry into the disciplinary matters


which have been raised? [An HON. MEMBER: "He did not say so."] My right hon. Friend also made it clear that it is, of course, the Government's responsibility to do so and to come to a decision and take the necessary action if justified by the inquiry. There is absolutely no support for the statement made by the Leader of the Liberal Party, which was quite unworthy of him.

Mr. Ennals: I am glad that the right hon. Gentleman has made the position clear. This is not a matter that ought for a moment to be an issue of party controversy.

Mr. C. Pannell: Is the Minister aware that these matters have been associated with a Press reference to interference by an M.P. and that presumably it is our duty sometimes to make representations of this sort? Is he further aware that he ought not to take too much notice of the inept handling of this question by the Leader of the Opposition and hon. Members opposite, which gives the impression to which the Leader of the Liberal Party has alluded?

Mr. Ennals: There have been a number of reported statements in the Press. I should make clear that the investigation will also cover steps taken to publicise the incident and other statements attributed to immigration officers in the Press. That is one thing which is being inquired into.

Mr. Mendelson: With reference to the urgent need to set up appeals machinery, does the Minister recall that his right hon. Friend the Home Secretary, during the Committee stage of the recent Commonwealth Immigrants Act, in reply to an intervention by me, gave the House an assurance that he would try to persuade his Cabinet colleagues to bring in legislation setting up this appeals machinery later this summer? Is he, therefore, now going back on that in the statement he has made today, when it has become all the more obvious that appeals machinery is needed?

Mr. Ennals: I am not going back on anything said by my right hon. Friend. As I have said, he made it clear that an immigration appeals Bill is high on the list of Bills being considered for next

Session. But it would not be possible now to introduce a Bill, which would be a very complicated one to cover the kind of appeals system recommended by the Wilson Committee; and it is not the kind of legislation which should be rushed through the House.

Sir C. Osborne: Would not the hon. Gentleman agree that these immigration officers are responsible and experienced men, dealing with a very difficult problem and that they must have been driven to extremes to make a statement that there was widespread corruption and evasion of the law? This, therefore, would justify them as ordinary citizens in doing so. [HON. MEMBERS: "Oh."] I thought that this House believed in free speech, Mr. Speaker. These men must have been driven to extremes by experience which they alone have had in seeking to bring this corruption to the public notice. Would not the hon. Gentleman agree with that?

Mr. Ennals: I do not think it appropriate for me to make any comment on the question of the hon. Gentleman. These are precisely the matters being inquired into and it is not helpful for the hon. Gentleman to seek to put more words into the mouths of immigration officers.

Mr. Whitaker: Would my hon. Friend agree that while these officers are as entitled to their opinion as anybody else, public confidence in their impartiality is now destroyed by the tone of their statement yesterday? Therefore, would he recognise that appeals machinery is already long overdue and will he say why it cannot be introduced with the expedition with which the Commonwealth Immigrants Act was rushed through the House recently?

Mr. Ennals: I would not agree at all with the initial conclusion of my hon. Friend. I do not think that the House ought to draw its conclusions until the outcome of the inquiry which my right hon. Friend has instituted is made known. But it is right to make clear to my hon. Friend and to the House that none of the immigration officers who, it was alleged, have signed this letter have a right to refuse anyone entry at the port at which they are serving. Officers of the basic grade of immigration officer have no


power to refuse entry. That power is vested in the higher ranks of chief immigration officer and immigration inspector. Only officers of the basic grade of immigration officer have signed the letter.

Several Hon. Members: Several Hon. Members rose—

Mr. Speaker: Order. We must move on. We have a lot of business.

Mr. Faulds: On a point of order. I should be very grateful, Mr. Speaker, if you could enlighten me on a certain matter. I need a much lesser degree of enlightenment that most of the hon. Gentlemen opposite. I have always understood from older Members of the House that if an hon. Member put in a Private Notice Question and—unfortunately, from his point of view—someone else had done so before him, he was normally likely to be called when questions on that subject came up.

Mr. Speaker: The hon. Gentleman is right, though it is not an absolute rule. It is true that the hon. Gentleman this morning put in an identical Private Notice Question. I had forgotten for the moment, I should have called him for a question. Mr. Faulds.

Mr. Faulds: Mr. Speaker, you restore both my faith and my spirit. In view of the fact that the claim of these men to impartiality has been invalidated by their actions, is it not quite inconceivable that they can possibly be allowed to continue in their present duties?

Mr. Ennals: As I have said, I believe that it would be quite wrong to draw precise conclusions of this kind from a situation which has just blown into the Press and which is now being searchingly examined by my right hon. Friend. This would be quite the wrong time to do so. [An HON. MEMBER: "Why suspend them?"] An hon. Gentleman asked why they should be suspended. No disciplinary charges have been preferred. There are appropriate safeguards in the Civil Service disciplinary procedure, as agreed with the Whitley Council.

BUSINESS OF THE HOUSE

Mr. Heath: May I ask the Leader of the House whether he will state the business of the House for next week?

The Lord Privy Seal and Leader of the House of Commons (Mr. Frederick Peart): Yes, Sir. The business for next week is as follows:

MONDAY, 29TH APRIL—Consideration of Private Members' Motions until seven o'clock.

Afterwards, Second Reading of the Customs Duties (Dumping and Subsidies) Amendment Bill.

Motion on the Sunday Cinematograph Entertainments Order.

Prayer on the Dangerous Drugs (Supply to Addicts) Regulations.

TUESDAY, 30TH APRIL—Second Reading of the Restrictive Trade Practices Bill.

Prayer on the Industrial Training Levy (Amendment) Order.

WEDNESDAY, 1ST MAY—Supply [19th Allotted day]:

Debate on an Opposition Motion on Rising Prices.

THURSDAY, 2ND MAY—Motion relating to the Secretary of State for Employment and Productivity Order.

Remaining stages of the Air Corporations Bill and of the Commonwealth Telecommunications Bill [Lords].

FRIDAY, 3RD MAY—Private Members' Bills.

MONDAY, 6TH MAY—The proposed business will be:

Second Reading of the Social Work (Scotland) Bill [Lords].

Mr. Heath: Before Easter I constantly pressed the then Leader of the House for a statement about Forces pay, and we were promised one. It is now long over-due. Can the right hon. Gentleman ensure that a statement is made on the subject next week?
Secondly, the right hon. Gentleman's predecessor promised a debate on the Government's White Paper on Prices and Incomes. In view of the clear conflict which now exists between the Trades Union Congress and the Government, can


the Leader of the House say when we are to be able to discuss the White Paper?

Mr. Peart: I am well aware of what was said by my right hon. Friend the Lord President of the Council, but I believe that the Leader of the Opposition will agree that I cannot be bound by that. He will recognise that there is a new situation, because I, as Leader of the House, may have a different approach. It may be an improvement, I do not know. [Interruption.] If the Leader of the Opposition will listen, there have been changes. I will try to see that the promise on Forces pay is fulfilled.
On the question of a debate on the White Paper on Prices and Incomes, the situation has changed in view of a new Ministerial responsibility. We are to discuss this next week. I would like to have discussions with hon. and right hon. Gentlemen on this; I believe that there could be some difficulty here.

Mr. Heath: It is just not good enough for the new Leader of the House to come along and say that he is going to dishonour his right hon. Friend. Right hon. Gentlemen in the same Government are there to honour each other's obligations. Will the Leader of the House kindly go away and return to the custom of honourable conduct which Members try to maintain in this House?

Mr. Peart: When a new Minister comes in it is right and proper that he should look at the situation. If he feels that there should be a different approach it is open to him to try to convince his colleagues. My right hon. Friend said that this was to be a new Mark II Cabinet.

Mr. Speaker: Order. I remind the House that there is important business ahead, and that many hon. Members are eager to speak. Those who are not might ration their business questions.

Mr. Orme: Could my right hon. Friend give us some details about the Prices and Incomes Order, which is to be brought forward on Thursday, and to what it appertains?

Mr. Peart: It is a transfer of functions Order. It concerns the responsibility of the Minister concerned with prices and incomes.

Mr. Braine: In view of the concern repeatedly expressed on both sides of the House for the future of British Honduras and the fact that the Government have now received the American mediator's report, can the right hon. Gentleman give an assurance that a statement will be made not later than next week on the Government's intentions about the future of this territory?

Mr. Peart: I recognise that the hon. Gentleman is deeply interested in this subject. I will convey what he has said to my right hon. Friend.

Mr. Coe: Would my right hon. Friend consider arranging an early debate to take note of the recommendations of Mr. Speaker's Conference?

Mr. Peart: I will carefully note what my hon. Friend has said. I am dealing specifically with business for next week. I cannot find time for a debate next week.

Mr. Gresham Cooke: Will the Motion on Procedure on the Order Paper, to which my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) and I have tabled an Amendment, as well as the Liberal Party and others, be debated?

Mr. Peart: It will be on Monday.

Mr. J. T. Price: Can my right hon. Friend tell me how much of next week's business will be "bugged" by the apparatus installed by the B.B.C. and controlled from the glass box at the end of the Chamber? Is he aware that there is a great deal of opposition on these benches and in the House generally to the televising and recording of our proceedings and that we shall want a much fuller explanation at an appropriate time of what is taking place?

Mr. Peart: I understand my hon. Friend's feelings. The experiment is proceeding under the arrangements made by the House, as my hon. Friend well knows, following the Resolution of the House on 11th December last. It finishes on Friday, 17th May.

Dr. David Kerr: Would my right hon. Friend bear in mind the urgent necessity for the House to debate the recent United Nations Conference on Trade and Development?

Mr. Peart: Yes. That is a very important matter, but I cannot find time for a debate on it next week.

Mr. Sharples: When will the right hon. Gentleman honour one of his own promises, namely, to give time for a debate on the Report of the Estimates Committee on Prisons and Borstals?

Mr. Peart: I said that I would carefully look into this matter. I did not say specifically a whole day on Supply. I said that I would do my best. I am having talks on this matter. I know that many hon Members on both sides of the House are anxious that this subject should be debated.

Mr. Maudling: In my recollection, the right hon. Gentleman definitely offered half a day. The only point at issue is whether half a day is enough or whether the whole day, which everyone wanted, would be right.

Mr. Peart: It is true that I did suggest a half day and I am sorry that it was not accepted. This is the difficulty. I know that many hon. Members feel very strongly that this subject should be debated. I undertake to look into the matter very carefully.

Mr. Turton: Further to the right hon. Gentleman's reply to my hon. Friend the Member for Twickenham (Mr. Gresham Cooke), do I understand that the Motion on Procedure is not being taken tonight, as is on the Order Paper, but that it will be taken on Monday?

Mr. Peart: That is true. I should like to have discussions on this matter. Perhaps we had better have a word about it later.

Mr. E. Rowlands: Would my right hon. Friend clear up what he said about the important debate on the Estimates Committee's Report on Prisons and Borstals? Will he give an assurance that it will be a whole-day debate? That was the bone of contention with members of the Committee last time.

Mr. Peart: I cannot commit myself. I have said that I will have further talks with my right hon. Friend about this subject.

Mr. Deedes: In view of the growing doubt on the subject, do the Government intend to enable the House to

debate the question of the Channel tunnel before we are irretrievably committed to it?

Mr. Peart: That does not arise on business for next week. I will note what the right hon. Gentleman has said. It may be that we can have a debate on this very important matter later.

Mr. Ogden: Is my right hon. Friend aware that Report No. 62 of the National Board for Prices and Incomes on Increases in Rents of Local Authority Housing was published this afternoon? Would he try to find time for a debate on housing in the very near future?

Mr. Peart: My right hon. Friend has already made a statement about this very important Report. I think that it deserves consideration.

Sir C. Osborne: How soon will the prices and incomes legislation be introduced?

Mr. Peart: I hope that the Bill may be introduced in the middle of next week.

Mr. Wellbeloved: Would my right hon. Friend find time next week for a debate to restore public confidence in the ability of citizens to write to their Member of Parliament without fear of their letter being released for political purposes?

Mr. Peart: I note what my hon. Friend has said. He has stressed a very important right, but there is not time available next week to discuss it.

Sir T. Beamish: How much longer is the House to be kept in the dark about the future of the Territorial Army, the abolition of which was announced last January, since when there has been no statement whatsoever? Is this not a disgraceful state of affairs? May we have a statement next week?

Mr. Peart: I am aware that the hon. and gallant Gentleman has a deep interest in the Territorial Army, as have many of his colleagues and other hon. Members, on both sides. I will certainly convey his views to the Minister responsible.

Mr. Mackintosh: I appreciate that the time of the House is limited to very important and pressing matters, but would my right hon. Friend consider arranging


for a debate to take place in the Scottish Grand Committee on the newly published Report on the Central Borders of Scotland which, to people in that area, merits discussion, if not necessarily time on the Floor of the House?

Mr. Peart: I note what my hon. Friend says. The more discussion we have in the Scottish Grand Committee, the better.

Mr. Kenneth Lewis: What will happen on Monday when we have Questions down to the Ministry of Labour, but there is no Minister of Labour, and when there is only a First Secretary of State and Secretary of State for Employment and Productivity? Will the right hon. Gentleman change the right hon. Lady's title back to "Minister of Labour", or will the name of the Ministry be changed before we reach those Questions?

Mr. Peart: The Ministry of Labour still exists. The change of status and occupation will take place on Thursday, 2nd May; I have stressed that. I do not think that we shall have any difficulty in getting someone to answer.

Mr. Kenneth Lewis: On a point of order. This puts the House in an extra-ordinary situation. On Monday, we shall have a Minister answering for a Ministry which will change within a

week, and we have not a Minister representing that Ministry.

Mr. Peart: I do not think that this arises on Business questions, but I will look at the point. The matter of answering Questions and the change in the roster must be discussed through the usual channels, and that will be done.

Viscount Lambton: Would the right hon. Gentleman be more definite in his assurance that there will be a statement on British Honduras, bearing in mind that the Foreign Secretary earlier said that there would be a statement following the mediator's report? It is of the utmost importance that we have a positive assurance that there will be a statement in the near future.

Mr. Peart: In view of the importance of this matter, which one of the hon. Gentleman's colleagues stressed, I gave an assurance that I would convey what was said to the Minister responsible. I can do no more than that. I recognise the importance of this matter. I will do what I can.

Mr. Marten: In view of last week's statement about E.L.D.O., will the Government give time for a debate on space?

Mr. Peart: Not next week. This is a very important subject, and it may well be that we can discuss it at a later stage.

BRISTOL SIDDELEY ENGINES LIMITED

Mr. Speaker: May I remind the House that 23 hon. and right hon. Members wish to speak in this debate. Each of them has a special contribution to make. I want to call as many of them as I can. I can do so only if those whom I call make brief speeches. I have selected the Amendment in the name of the right hon. Member for Mitcham (Mr. R. Carr) and his right hon. and hon. Friends.

4.30 p.m.

The Minister of Technology (Mr. Anthony Wedgwood Benn): I beg to move,
That this House accepts the conclusions of the Report of the Committee of Inquiry into Certain Contracts made with Bristol Siddeley Engines Limited.
I hope that it will be for the convenience of the House if we take this Motion and the other Government Motion—
That this House takes note of the Third Special Report from the Committee of Public Accounts.
—and the Amendment together, so as to allow a wide-ranging debate.

Mr. Speaker: I thought that that would be the convenient course, if the Opposition has no objection. So be it.

Mr. Benn: The matters that the House has before it today are of the most serious kind. They involve millions of pounds of public money, the administration of the Government's contract procedures, the behaviour of individuals exercising responsible positions both in Government and in industry, and three Reports have been presented to the House covering these questions.
The initial Government Motion relates to the Wilson Committee Report, but, of course, the two Reports of the Public Accounts Committee are also before the House. The Government thought it right not to intervene between the House and one of its own Committees, and therefore Tabled a rather different form of words for that.

Mr. John Boyd-Carpenter: The right hon. Member has referred to two Reports of the Public Accounts Committee. The Order Paper

refers to the Third Special Report of this Session.

Mr. Benn: If the right hon. Gentleman will read HANSARD, he will find that what I have said is so. Three Reports have been presented to the House on this question, and are before the House in the sense that they are part of historical record.
The reports refer to events that began nine years ago and we have not yet seen the end of them.
With these ingredients, this debate could easily assume an explosive quality which would not be appropriate. No doubt, there will be sharp criticism, and, indeed, it is right that there should be. But for that very reason I hope that the House will agree that we should act as moderately as possible in debating these issues. There is another reason for this, too. Some of the issues are of such complexity that it will not be possible to present them clearly unless we adopt a dispassionate approach.
I should particularly like to ask the indulgence of the House while I try to set out the main facts and the conclusions that have been drawn about them, so that we can identify, from a mass of evidence, those issues which are the most important, and debate these as the central theme today. Our aim must be to avoid a repetition of what has happened. We should try not to be side-tracked into marginal issues, for what matters most is that we should try from this sorry story to create a new trust and confidence between Government and industry.
The background to the Bristol Siddeley affair is now so well known to hon. Members that I do not intend to describe in detail the facts that are to be found in the opening paragraphs of both the Public Accounts Committee report of July, 1967 and the Report of Sir Roy Wilson's Committee of Inquiry, published in February, 1968.
The main facts are as follows. Part of the defence work carried out by Bristol Siddeley under contract from the old Ministry of Aviation consisted of over-hauling aero-engines and repairing components and parts. The Ministry placed annual contracts for this work, and the contracts contained a provision that "fair and reasonable" prices would be paid.


The company submitted quotations for each contract and in most cases the Wilson Committee found that these included an exorbitant element for profit based upon inflated and deliberately deceptive estimates.
The Department's technical cost staff made their own estimates and reported them to the Department's contract negotiating officers, who then negotiated firm fixed prices with the company. We now know from what the Wilson Committee Report said that the technical cost estimates were far too high, and that the technical cost staff failed to detect the element of gross overquoting by the company.
In the result, year after year, the Department's contracts officers took part in what Sir Roy Wilson calls "a stylised game". They sat down time and again with the company's representatives, believing that the company's quotations were broadly fair and reasonable, and that the advice from their technical cost colleagues was well-founded and reliable. The staff fought hard for small reductions. On the other side of the table were the company's negotiators who, the Wilson Committee found, knew that the quotations were exorbitant and that the Department's technical cost staff were quite unaware of this.
The result was that on the overhaul contracts the company made a profit of the order of 74 per cent. on costs of about £9½ million in the years 1959–63; and that, within these figures, they made about 105 per cent. profit on costs of about £4·4 million on the overhaul of two types of engine. On the contracts for the repair of spare parts in the years 1959–65 the profits were of the order of 40 per cent. on costs of just under £8 million.
The report of Sir Roy Wilson's Committee of Inquiry describes in some detail how they found these high profits came to be disclosed. In January, 1964 the Comptroller and Auditor General had reported on the Ferranti case of excessive profits on guided weapon contracts. Until then the Department had agreed fixed prices for overhaul contracts on the basis of estimates, even though they might not have been compiled until the work was fully advanced or even completed.
As a result of the Ferranti case, the Department decided to modify its prac-

tice. During discussions about the pricing of a batch of new engines, a senior officer of the Department told Bristol Siddeley that in future, before forward fixed prices were agreed, costs would be ascertained for an initial production batch. He also made it clear that fixed prices would not be agreed for engines and parts which had already been delivered —in other words they would be priced on cost plus.
The company, Bristol Siddeley, realised that this new policy might be applied to the overhaul contracts. This placed them in a serious dilemma. In May, 1964 no prices had been agreed for the 1963–64 and 1964–65 overhaul contracts. Quotations had been submitted. To the knowledge of the company's commercial manager, these quotations would have produced profits, so the Wilson Committee says, averaging over 100 per cent. on costs on some engines, and very high profits on the rest.
In September, 1964, the business director put a memorandum to his chairman and board of directors. This has now been published as Appendix IV of the April, 1968, Public Accounts Committee report. It made the point that,
if final prices anywhere in the region of the company's quotations are agreed on the outstanding engines…they will, on the basis of recorded costs as currently understood plus formula profit, be far in excess of what officials—or Members of Parliament—would regard as fair and reasonable.
The memorandum noted that the Lang Report on the Ferranti affair had made it clear that the official view was that there was an obligation on the contractor to alert the Ministry of the situation if the contractor was aware that the Ministry was willing to agree a price not fair and reasonable. The memorandum spelled out the dilemma that for the company to carry on regardless—i.e. let the exorbitant quotations stand in the expectation that the Ministry would accept them—would be
to risk a scandal of the greatest magnitude.
The memorandum pointed out that if, on the other hand, it withdrew the quotations, questions would be raised about the prices fixed in previous years.
The memorandum warned the Board that the issues were grave. But it did not propose that the Ministry should be told fairly and squarely of the situation.


Instead, it proposed that a letter should be sent to the director of contracts saying that the company did not acept that costs, plus a fair profit, were the measure of what constituted a "fair and reasonable" price on any one fixed price contract.
There followed the interview with the Ministry announcing the withdrawal of the quotations and the substitution of fresh ones.
It was this which led to the inquiries about the profits in earlier years. But even so the company did not volunteer the necessary information but had it extracted from them by the Ministry.
It was not until February, 1967, after my hon. Friend, then Minister of Aviation, now Minister of State, had exerted a great deal of pressure that the company finally disclosed enough information to allow a settlement to be made, and that is how the £3·96 million was repaid.
Although the Ministry had long believed that the company's negotiators must have known that the quotations were excessive, and had taken full advantage of the failure of the technical costing officers, it was not until the Wilson Report was received in February of this year that the full extent of what had happened became known through the Wilson findings. I shall be saying more about the Wilson Committee in a moment but, before doing so, let me remind the House of its main findings, which I am inviting the House to accept.
The Wilson Committee found that the company
budgeted for and achieved exorbitant profits on their overhaul contracts with the Department".
It also found that the approximate extent of the profits was at the time known to the company at all levels of management not only to the company's staff at lower levels, but also to the Executive Committee, of which the Managing Director was Chairman and of which most of the Directors were members. In the judgment of the Wilson Committee, the conduct of the company's estimating and price negotiating staff amounted to "intentional misrepresentation" and the double charging
was known to the company's estimating staff from about the dates when in each case it first occurred".

Mr. Eric Lubbock: When the right hon. Gentleman says that it

was known to the company's estimating staff, does he mean that it was known to the whole estimating staff, or did the Wilson Committee mean that, or is his remark confined to the three individuals concerned, one of whom has been compulsorily retired and the other two of whom have been transferred to other work?

Mr. Benn: The Wilson Report is there for the hon. Gentleman to see for himself. It is inconceivable that the reference can be other than to the estimating staff concerned, just as when reference is made to the technical costing staff in the Ministry, it means those staff concerned with the Bristol Siddeley overhaul contracts.
The House will know that the Wilson Committee itself has been criticised sharply in the last few days: first in a pamphlet published by Bristol Siddeley, and secondly by the Opposition Amendment which condemns its procedure as being contrary to the basic rights of natural justice.
I should like to take these two criticisms separately, although there is a significant area of agreement between what Bristol Siddeley say and what the Opposition say on the question of natural justice.
The Bristol Siddeley pamphlet is a remarkable document. Perhaps the most remarkable aspect of it is that it does not contain one single expression of regret on behalf of those who were responsible for the company at the highest level, for what had occurred. Whatever interpretation may be put upon events or the conduct or the motives of individuals, there might have been some opportunity found, even by those whose main concern is to defend themselves to express some regret at what had happened. Instead there is a stream of self-justification.
The engine overhauls are described as being "relatively humdrum business". The words "fair and reasonable" contained in the standard contract are described as not having been regarded
as imposing any special contractual obligation on the contractor".
It is asserted that
it would be a view widely held among contractors engaged in government work that in considering the profitability of government


business the right course was to consider the profitability of that business as a whole".
Certainly that throws some doubt on the value of individual negotiations if the profitability is to be looked at as a whole.

Mr. F. V. Corfield: Can the right hon. Gentleman say whether these contractual obligations are created and, if so, why action on the contract was not proceeded with? It is clear that there is no legal remedy.

Mr. Benn: The recommendation of the Lang Committee, which was set up by the previous Government, was that the term "fair and reasonable" was to mean what it said—fair and reasonable. I am picking out from the Bristol Siddeley pamphlet the special way in which the company goes out of its way in its reply to the Wilson Committee to say that it did not regard the words "fair and reasonable" as imposing a special contractual obligation on the contractor.
In justifying the delay in reaching an agreement on the repayment negotiations, the B.S.E. pamphlet comments that the company
had in its turn several reasons for being dissatisfied with the consideration being given by the Department to its representations on other matters outstanding at the same time (in particular claims arising out of the cancellation of the engines for TSR.2 and P.1154)".

Mr. Nicholas Ridley: Does the right hon. Gentleman believe that the fair level of profit should be attached to the overall profitability of work for the Government, or to each individual contract?

Mr. Benn: If there are to be negotiations about individual contracts between the Government and a contractor, and if they are to be played out in a way that is other than as a stylised game, the negotiations must be about the profit for that individual contract, and it is no good later saying, "We never regarded the profit for that contract as important as the overall profitability of government business as a whole."

Mr. Ridley: Mr. Ridley rose—

Mr. Benn: I have a lot to say, and I think I ought to be allowed to continue. The hon. Gentleman can make his speech

in due course. My right hon. Friend the Chief Secretary will be winding up and, since this matter covers the whole range of government contracting procedures, the Chief Secretary can cover it much better than I can.
I quote these passages from the pamphlet because they illustrate its general tone. Its conclusions are designed to prove that the Board and Executive Committee were wrongly implicated, although the pamphlet accepts that the Coventry chief estimator
may have misled the D.T.C. negotiators in relation to the overhaul contracts.
The House will have to decide for itself whether it prefers to take the view of Bristol Siddeley or the conclusions of the Wilson Committee. The Wilson Report sets out the story very fully and its own conclusions very clearly. I certainly do not regard it as my job to try in this speech to duplicate the work of the Wilson Committee or the P.A.C. But all of us have to make our own judgement, and I accept the conclusions reached by the Wilson Committee and invite the House to accept them, too.
Both the Bristol Siddeley pamphlet and the Opposition Amendment refer to "natural justice" and, by implication, condemn the Wilson procedure. Were the House to accept these strictures, the Wilson Committee would indeed be condemned. But can a view like this really be sustained?

Mr. Robert Carr: I am anxious that the House should be clear as to the intention of our Amendment. We are only condemning the procedures in so far as they are used not to form a general judgment, as was the case of the Lang Committee investigating the Ferranti affair, but in order to condemn certain identifiable individuals. The procedures which may be right for the first purpose, in our view, are not right for the second purpose.

Mr. Benn: I am just coming on to a passage which is designed to deal with this very point. I tried to address myself in advance to what I took to be the Opposition's argument.
When it was announced, a year ago, that an independent Committee of Inquiry was to be set up to investigate the


circumstances surrounding the pricing of these contracts, this decision was warmly welcomed by the Opposition.
The membership of the Committee was made up of three experienced and distinguished men. The Chairman, Sir Roy Wilson, himself a distinguished lawyer, was praised in this House only two days ago by the right hon. and learned Member for St. Marylebone (Mr. Hogg), who welcomed his appointment to the Race Relations Board. Is it seriously to be argued that when men of this calibre are invited by Ministers to investigate a matter of this kind they would proceed in a way contrary to natural justice?
Of course, the Committee's Report is now the property of the House, and it is we who have to decide whether to accept it. But I make no secret of the fact that the best guarantee we can have that justice was done lies in the composition of the Committee that had this task laid upon them.

Mr. Cranley Onslow: No.

Mr. Benn: If the hon. Gentleman will listen to what I am going to say, he will see that it is not the only argument that I am adducing.
Perhaps the most powerful point in support of this view can be derived from the fact that, before the Committee began its work, it met the leaders of the company and of the Department to agree the procedure. This was done on 2nd May last, and the procedure is described in paragraph 9 of the Report. At that meeting, with the agreement of both the Department and the company, it was decided to follow the Lang procedure, and among the Lang precedents followed was the decision that statements and submissions would not be exchanged.
It has been argued—and it is argued in the Amendment—that individuals should not have been identifiable in the Report. In this connection, I must tell the House that every witness who appeared before the Committee was told that. although the Committee intended to avoid any reference to individuals by name, it might not be possible to avoid referring to individuals by the office that they held.
The Chairman of Bristol Siddeley, Sir Reginald Verdon-Smith, agreed that form of words himself.
Nor is it true that in the Lang Report on the Ferranti case individuals were not identified. If the right hon. Gentleman wishes, I can find from the Lang Report references to individuals who can be identified. Indeed, there was strong pressure from hon. Members opposite that the Easter weekend should be examined very carefully. In what possible sense could the Easter weekend be examined by the Wilson Committee without identifying individuals, whether my hon. Friend and myself or, more importantly, the civil servants who were involved in those events? The objection on the ground that individuals should not be identified does not really bear examination.

Mr. Onslow: I was one of those who suggested that this should be done. I do not object to the identification of individuals. If the right hon. Gentleman will read our Amendment he will see that it objects to the condemnation on grounds which are unjust to individuals who are identified.

Mr. Benn: If individuals can only be mentioned to be praised, not criticised, there is no point in having a Committee of this kind.
This then was the procedure and, to the best of my knowledge, no witnesses objected to it. In those circumstances, it is difficult, if not impossible, to contend that "natural justice" has been violated.
This, of course, was not a judicial proceeding and was not intended to be. As the House knows, after consultation with the Director of Public Prosecutions, the Attorney-General decided not to prosecute.
I now come specifically to the Opposition Amendment which invites the House to accept the conclusions of the Report
…except in so far as they condemn identifiable individuals denied, by the procedure adopted, the basic rights of natural justice.
If this Amendment were accepted it would entirely negative the first three conclusions of the Wilson Committee. It would delete the reference to the finding that the exorbitant profits had been known to the company
at all levels of management".


It would delete the criticism of the company's estimating and price negotiating representatives as having
amounted to intentional misrepresentation.
It would delete the finding that double charging had been
known to Bristol Siddeley Engines estimating staff from about the dates when in each case it first occurred, and to certain of their superiors at later dates.
In short, the Opposition Amendment would completely after the main findings of the Wilson Committee and leave us with conclusions so weak and general as to make the whole Wilson inquiry into a waste of time.
I should like to ask the House to consider very carefully the implications of following such a course. For, in effect, it would be saying that the Wilson Committee should have been allowed to investigate the circumstances on the understanding that, regardless of what it found, nobody should be blamed for their part in it.
Is this really what the Opposition want by their Amendment? I do not believe that it can be. Ought they not to consider their own position, because the events with which we are concerned occurred, in the main, when they formed the Government and were ministerially responsible for safeguarding the public money involved.
When a similar case came to light—the Ferranti case—during the lifetime of the previous Administration, they set up the Lang Committee, upon which the Wilson Committee modelled itself.
Of course, it is true that the two Committees came to conclusions that were different in kind. But that was because the cases were different and the degrees of culpability were assessed differently by the two Committees; not because the rules under which the two Committees were operating were different. As I have shown, the Lang Committee identified individuals.
I think it would be a very curious procedure for a committee's report to be effectively rejected because of the nature of the things it had found out. That is the only real substance in the Opposition Amendment. At any rate, I hope very much that the Opposition will not press their Amendment to a division.
All procedures adopted when inquiries are undertaken represent some sort of a compromise between alternative methods of arriving at the truth, but having read what Wilson found in this case I do not believe that the procedure can be faulted and I am sure that it should not be repudiated by the House today.
I now turn to the rôle of the Department's staff in the years in question.

Mr. R. Carr: Before the right hon. Gentleman leaves that point, would he not think it right that at the stage when the Wilson Committee thought it might want to make very serious charges—I would not be exaggerating if I said criminal charges—against individuals, the procedure should have been changed and something else done?

Mr. Benn: The right hon. Gentleman knows that the Wilson Committee did not make criminal charges. The Wilson Committee in its initial work in preparing its procedure had not expected that its findings would be as they were. Indeed, we who had been working on it departmentally for some years had not expected it either. But given the fact that the task had been laid upon it to find out the circumstances and given the fact that every witness had been told that he might be identified by the position that he held, I cannot find it right to blame the Wilson Committee for carrying out the duty placed upon it by the two Ministers concerned which was reported to, and, broadly speaking, was accepted by, the House.
I now turn to the rôle of the Department's staff in the years in question. I accept that the Directorate of Technical Costing fell seriously below a reasonable standard of competence.
Two years ago a departmental inquiry was held into the performance of the staff concerned, and those whose work had fallen below standard were told so. But all this happened before the findings of the Wilson Committee and the "intentional misrepresentation" was identified by it. It was before Permanent Secretaries, Ministers, the Public Accounts Committee and the Wilson Committee


had had their own experience of difficulty in getting the company to expose the true position.
These technical costs officers fell below standard, but, in retrospect, the House will probably feel disposed to be more generous in reviewing the behaviour of comparatively junior civil servants who thought that they were dealing with business people on the basis of ordinary directness and trust.
The House will want to know of the measures that have been taken in the Department to see that a repetition of what happened is less likely.
Those recommendations of the Lang Committee which were practical have been implemented and the Wilson Committee's own recommendations are also being studied. There is now much better co-ordination between the various directorates in the Department and the overall staffing has been substantially improved over the last four years. The total complement of the purchasing, technical costs and accountancy branches have risen from 1,126 to 1,409 and the actual strength from 1,041 to 1,210.
In addition, the Government have now reached an agreement with industry—

Mr. John Smith: Why is it necessary to employ all these people if the company is expected to give every piece of information that it possesses?

Mr. Benn: The hon. Gentleman misunderstands the position. The position was that until the agreement with industry about equality of information, to which I am about to refer, there was not, and there still is not, any right of access to the books of the companies concerned. I am describing the build-up of staff from the time when, partly due to understaffing, the technical costs officers fell below the acceptable level of competence.
The Government have now reached an agreement with industry about equality of information and post costing. This provides the best possible chance of preventing this sort of thing happening again. Linked with this agreement is to be a review board to consider and take a decision in cases where prima facie excessive profits or losses have been made.
I now come to the question of any further recovery which might arise from these contracts. We are here dealing with Rolls Royce, who are entirely guiltless in this affair, but with whom we are naturally discussing it since they now own Bristol Siddeley.
Rolls Royce have been invited to report on other Bristol Siddeley contracts with the Department, and I am confident that they will respond. I shall let the House know as soon as these discussions are completed.
Two relatively minor issues arising out of the Wilson Report should be mentioned.
The first relates to over-payments resulting from the billing of certain repair work at the higher prices appropriate to work done in later years. This has now been fully investigated and the sum of £84,000 has been repaid.
The suspected further double-charging referred to in paragraph 229(b) of the Wilson report has been investigated by the Department in collaboration with the firm's auditors. It is agreed that double charging within the repair of spares contracts took place, but this was to the extent of no more than approximately £300, which has also been repaid. No evidence has been found of any triple charging.
It is also known that certain of the company's cost records were altered. However, I am satisfied that these alterations were not actually used to deceive the Department in any way, and from the House's point of view it simply confirms that the Wilson Committee was right in saying that some of the estimators knew that double charging on the overhaul contracts was taking place.

Mr. Corfield: I think I am right in saying that it has also been agreed that the double charging on repairs was entirely accidental?

Mr. Benn: The accidental nature of the double charging is not disputed, but the fact that there had been an alteration of the records some time previously indicates that there was some knowledge somewhere of what had gone on.
Before I go on there are one or two points to which I should refer. I have made a passing reference to the Easter


weekend, and of course the Wilson Committee reported—

Mr. David Howell: Mr. David Howell (Guildford) rose—

Mr. Benn: There are many hon. Members who wish to speak, and perhaps the hon. Gentleman will allow me to continue. I have a little more to say, and I should conclude it as quickly as I can.
The Wilson Committee Report covered the events of the Easter weekend and it found that these
were not due to any impropriety but to muddles largely caused by a whole crop of mischances such as are unlikely ever to occur again".
That followed from the wide terms of reference given to it.
Finally, since the Wilson Committee Report was published the Committee has revised the profit figures in paragraph 177 at line 13. These corrected figures do not in any way alter the main conclusions of the Committee. In particular, it still remains true that Bristol Siddeley's business with customers other than the Department was, during the period concerned, only viable on the basis of allocating to the Department the major share of costs which the Department still regards as largely inadmissable.
Apart from the matters which are to be further discussed with Rolls Royce, the case is almost closed, except for one issue which essentially concerns the Government. It is the most difficult issue of all, in that it raises the question of what the Government should do in respect of the leading industrialists who were responsible for the affairs of Bristol Siddeley at the time when these events took place.
They are, of course, not the only individuals affected. The technical costs staff concerned in the Department were suitably reprimanded after an internal inquiry had been held. Certain staff in the company have been moved, and in one case retired from service. The Government have had to consider the position of those leading industrialists—two of whom, Sir Reginald Verdon-Smith and Mr. Davidson—had been appointed by the Government to public positions.
In considering what action to take the Government had to take account not only of the Wilson Report, but of the fact that the Public Accounts Committee in its latest Report wrote that the evidence of these two men

fell short of the accurate, complete and frank response to the Committee's questioning which the Committee were entitled to expect
and that
in almost every relevant passage the witnesses used words capable of more than one meaning.
In view of all that has happened, and in the light of the reports before the House, the Government have concluded that it would not be right for these two men to remain as members of certain public bodies to which they were appointed by the Government. Letters have been sent to them informing them that the Government propose to terminate their appointment to those bodies, and that this is being made known in the course of today's debate. These decisions, which were taken after the most careful consideration, were absolutely unavoidable. Those who hold Government appointments must enjoy public confidence.

Mr. R. Carr: I think that the right hon. Gentleman should tell the House the nature of those public appointments. I think that he should also say, since in the introduction to that part of his speech he said that he had to consider the position of those in charge of Bristol Siddeley's affairs at the time, why only these two men have been singled out. What about the managing director and other senior executives of Bristol Siddeley at the time?

Mr. Benn: The managing director of Bristol Siddeley at the time holds no public appointment. I am dealing simply with the two leading industrialists who hold public appointments. The appointments referred to are, in the case of Sir Reginald Verdon-Smith, membership of the Standing Advisory Committee on the Pay of the Higher Civil Service, the Review Body on the Remuneration of Doctors and Dentists, and the Advisory Council of the Overseas Services Resettlement Bureau. Mr. Davidson had been appointed a member of the Monopolies Commission.

Mr. R. Carr: Mr. R. Carr rose—

Mr. Benn: If the right hon. Gentleman proposes to ask me a hypothetical question about what would happen in other circumstances, I can tell him that I am not able to answer it. I am reporting


to the House the problem presented to the Government, not by the position of those two men in relation to the firms in which they were and still are occupying positions of responsibility, but whether, in all the circumstances, it would be right for the Government, or whether the Government would be in a position, to retain them in public appointments made by the Government, after the events described by the three committees and the conclusions reached by them.
I turn, now, from the past and what has happened, and what has been done about it, to the future, because the most important single thing that this debate can achieve is to mark the end of an old and completely discredited contracting system, and the beginning of a new one.
I do not believe that any responsible Member of the House, in Government or in industry, can really have been satisfied with a system of Government contracts which had become what Sir Roy Wilson called a "stylised game". Government and industry have to work closely together—and this relationship is bound to be even more intimate as industry itself grows into larger and larger units—excluding more and more products from effective competition, something that has already happened with aero-engines.
The closest of all these relationships is necessarily between a Government Department as customer and the firms which contract to it. The firms are entitled to make a fair profit out of their contracts in accordance with the terms negotiated. The taxpayer is entitled to get value for money. The Department is entitled to expect that it can deal with its suppliers on the basis of mutual trust. But this means a new system. It requires equality of information and post costing, and this my right hon. Friend the Chief Secretary has negotiated after many months of discussion. He represented the Government during the negotiations, and he will describe them in greater detail when he winds up the debate. It is this new start which really matters to the debate today.
No doubt in the administration of the new system we shall still have to expect human failings in relation to competence, or sometimes accuracy, on both sides. But if we can work it on the basis of fully justified mutual trust, the House

should never be called on again in the future to consider the sort of case which is before us today, and that, I am sure, is the fervent hope of us all.

5.8 p.m.

Mr. F. V. Corfield: I beg to move, at the end of the Question to add:
'except in so far as they condemn identifiable individuals denied, by the procedure adopted, the basic rights of natural justice'.
I should make it abundantly clear from the start, as the Amendment does, that we are concerned only with the injustices which may be done to named individuals and not to defend in any way the level of the profits, or the fact of double charging. I believe that I shall be able to convince anyone who begins to claim even a modest degree of impartiality, let alone a concern for justice, that the Amendment ought to be accepted.
Now that the Minister has made his statement in regard to the public positions occupied by Sir Reginald VerdonSmith and Mr. Brian Davidson, he has introduced into the debate a new element, and it is one that I regret. He referred in particular to the Public Accounts Committee findings as a reason. I would refer him to paragraph 18 of the Third Special Report of the Committee of Public Accounts in which the Committee say quite clearly that they
have reached the conclusion that at no point in that evidence were the witnesses knowingly attempting to mislead the Committee.
They go on to say that
their evidence was inadequate and confusing and fell short of…
and so on. If that was an intentional falling short, that paragraph becomes self-contradictory.

Mr. Maurice Edelman: The hon. Gentleman did not finish the quotation, because paragraph 18 says that the witnesses did not knowingly attempt to mislead the Committee. The question at issue is not whether they attempted to mislead the Committee but whether, in the course of their duties, they attempted to mislead the Department.

Mr. Corfield: With all due respect the hon. Gentleman is wrong. It says that
their evidence was inadequate and confusing and fell short of the accurate, complete and frank response to the Committee's questioning which the Committee were entitled to expect.


That has nothing whatever to do with the Department.
I would also refer the right hon. Gentleman to Questions 428 and 430 of the First P.A.C. Report, from which it is abundantly clear that when Sir Reginald Verdon-Smith was questioned on these points he made it clear that he was not the person responsible and indicated that it would be wise for the Committee to send for the person who was responsible. It was the Chairman of the Public Accounts Committee who, in his wisdom, replied to the effect that it was the custom of the Committee to ask for one or two representatives, and on that reply Sir Reginald did his best to give his replies from a document which he said was not his own responsibility.
Turning to the other matters in the Second P.A.C. Report, I suppose it will be said—in fact the right hon. Gentleman inferred this—that these two gentlemen had only a qualified acquittal on what had become issues numbers 2 and 4. Those issues depended solely on whether the answers given in the earlier proceedings were honest, and the only evidence that could have been given by those witnesses and which was given was, yes, they were honest. What other evidence could have been given? These people were in no position to call witnesses and examine them. That could only have been done by the Committee, and if the Committee were not satisfied it was for them to do so.
Let me return now to my speech. Because of this new element, I must warn the right hon. Gentleman that it will be not only the actions of the Bristol Siddeley Company which we shall now be investigating this afternoon: his integrity, the partiality of the Government, will also be investigated—[Interruption.]—and I suggest to hon. Members that in considering the Government Motion we have a grave responsibility.
Paragraph 232 of the Wilson Report does not purport to do more than mention the most important of the Committee's general conclusions, but I think it is generally agreed that it is this paragraph which will be generally understood to form the subject matter of this part of

the Government Motion. I do not think I need read the conclusions again, their contents are well known; the right hon. Gentleman has referred to them and he quoted them at length when he made his statement on 28th February. But inevitably it is those conclusions on which Press comment has concentrated and it is those conclusions on which individuals not inclined to study the Report in detail will have relied, and nobody can doubt that those are conclusions which will do incalculable damage to the reputations of those concerned. It was for this reason that when the Minister made his statement, I suggested that the right procedure would be to study the Report before further comment. I can only say that, for my part, the result of that examination—and far the greater part of it was done long before there was any statement by the company—has confirmed the wisdom of that suggestion.
One is struck, although the right hon. Gentleman endeavoured to dismiss this, by the extremely sweeping nature of these conclusions. Before I continue, I would just take him up on his comparison with the Lang Report. The Lang Report does not, in fact, endeavour to place individual responsibility. If he will look at paragraphs 52 and 53 of the first Lang Report he will see that it is quite clear that the findings were that the company put forward
estimates of costs which they knew were much too high.
But Lang does not go into finding out who knew, or why they knew, or in what way this came about. And the same applies with regard to paragraph 53.

Mr. Joel Barnett: In paragraph 71 of the First Report of the Lang Committee it is said that
Our principal criticism of Ferranti Ltd. is that they submitted quotations and agreed prices which they knew were very likely to yield profits that the Ministry would not regard as fair and reasonable, profits which can only be described as excessive.
Presumably individuals submitted the quotations.

Mr. Corfield: That is precisely the point I am making, but Lang did not find it necessary to name those individuals, which Wilson did. I submit that the sweeping nature of these charges is


a serious fault. For example, "all levels of management" referred to in the first conclusion must be taken to include all members of the board as well as those senior executives who were members of the executive committee, and it must also be presumed to include a wholly indeterminate number of other executives in a more junior position. Taking only the board and the executive committee as examples—although some individuals served on both —we have a position in which there were some 12 members of each and yet, nevertheless, only five members of the board and three members of the executive committee were ever invited to give evidence to the Wilson Committee. The rest were condemned unheard.
Let there be no doubt about this: the positions occupied by these people are widely known and widely identifiable throughout the whole of the aviation industry, throughout large sections of industry as a whole and in many spheres of public life, as well as where they live. And, as the hon. Gentleman the Member for Orpington (Mr. Lubbock) suggested, the same applies to the estimating staff. It comprises a large number of people, in the neighbourhood of 100, but only a very few can conceivably have had anything whatever to do with this. In fact, only four gave evidence and it seems that only two were actually involved in the subject matter of the inquiry, but all are smeared by these sweeping charges.
Moreover, we now learn from the company statement which was issued earlier that in some cases those who gave evidence, although ultimately charged with grave commercial misconduct or even deceit, were given no indication of the allegations made against them and therefore no opportunity whatever to rebut them.
There is a particularly disturbing example of this in paragraphs 10 and 11 of Chapter 8 on page 28 of the Company's document, which concerns the price controller and the commercial manager and the implication of knowledge by these gentlemen of double charging. I suggest to the House that those paragraphs should be studied. But equally serious is the tenuous nature of the thread between the arguments and the evidence in the body of the Report and the conclusions to

which such arguments and evidence purport to lead. In the body of the Report, for example, in paragraph 154, the evidence that the two members of the estimating staff involved were aware of the double charging
from about the date when in each case it first occurred,
which is the substance of the third conclusion, is quite plainly stated not to be "entirely free from doubt", yet that conclusion is stated in wholly categorical terms and is in no way qualified.
My second example involves a somewhat closer study of the Report, but it is no less disturbing, and it is particularly pertinent to the position of Sir Reginald Verdon-Smith and the Minister's announcement today. The study which I have made reveals the gravest possible doubt about whether members of the board who were not members of the executive committee knew, could have known or even ought at the time to have known of the high level of profits, either achieved or budgeted for.
For these reasons, and because these people—directors, senior executives and the individuals specifically referred to in the Report by their positions—are very easily identifiable, it seems imperative that the House should be clear as to, first, which levels of management knew or had the means of knowing the extent of the profits; and, second, the extent to which the procedure and conclusions of the Wilson Report and their acceptance by the Government may have inflicted injustice.
I want, first, to consider the position of the board, in part because it is the Chairman, who was not a member of the executive committee, who has borne the brunt of the public condemnation to which the Minister has added this afternoon, and in part because the evidence on which the Wilson Committee relied is in this case comprehensively set out and can be seen to be wholly inadequate for the conclusion which was reached.
I suggest that, in considering the responsibility of higher management, it is necessary to distinguish among, first, the vicarious responsibility attributable to a person by way of his office—as, for example, the responsibility of a chairman of a company or of a nationalised industry or that of a Minister; second, the responsibility arising from holding


a position in which the person concerned either may reasonably be deemed to have a duty to acquire the requisite knowledge or in which he had the means of knowledge to which he failed to advert; and third, the closely allied responsibility of actually having the knowledge.
On the subject of higher management, the House will recognise the distinction between the Board and the executive committee. The latter included all the executive directors plus some other senior executives under the chairmanship of the managing director. The chairman and three—later, I think, four—other non-executive members of the board were not members of the executive committee and the executive committee is, of course, acknowledged by the Wilson Committee to have been the central instrument of control within the company.
The means by which the financial control was exercised by the executive committee are set out in paragraphs 76 to 84 of the Report and comprise the following: first, the annual budget, setting out targets of costs, sales and profits, and forecasting the pattern of trading for each year, with the figures for business with the Ministry and those for other business set out separately; second, the five-year forecasts, showing total but not detailed anticipated profits from Government repair contracts; third, interim accounts and reports prepared on a cumulative four-weekly basis giving total figures for overhauls for the Ministry; fourth, trading and profit and loss accounts on a four-weekly basis showing total figures for overhaul profits only; fifth, special reports; and, sixth, certain monthly reports from the managing director. The only budget which was referred to the main board was that for 1959–60, giving only, in this connection, an overall total estimate of a 28·3 per cent. consolidated profit on costs for the six-engine types with which this part of the Report is concerned.
Several points should be borne in mind in considering the relevance of this figure. First, this was B.S.E.'s first year of trading and this figure must therefore have been derived from figures derived or inherited from Armstrong Siddeley. With the proposed transfer of this work from Brockworth to Coventry, it can hardly be supposed that such a figure

can have had much relevance for the future.
Second, the chairman, with whom we are here principally concerned, represented the Bristol Aeroplane Company and can therefore at that time have had no knowledge whatever of what had gone on in the past either at Coventry or at Brockworth. Third, no one has, in any case, suggested that a budgeted figure of 28·3 per cent. was to be regarded as excessive. The Wilson Committee neither considered that aspect nor expressed a view, but it clearly does not appear to be the view of Sir Ronald Melville that an attempt to achieve a profit of this order could be regarded as improper.
In reply to Question 104 of the P.A.C., on 1st June, 1967, he said:
Every firm knows what a fair and reasonable profit is. They know what the Government profit rate is. I certainly am not saying that a firm is not going to say to itself when it enters into a fixed price conract, 'Let us try to make 20 per cent. or 25 per cent.'. They probably do say that; they are bound to say that sort of thing to themselves…we do not mind.
The second "instrument of financial control" available to the executive committee comprised the five-year forecasts. Only those for 1959–60 to 1963–64 and for 1963–64 to 1967–68 were, according to the Wilson Report, circulated to the Board. In regard to the former, it will be noticed that, apart from the figure of 36 per cent. given for 1959–60, the forecast profits ranged from 26·1 per to 26·8 per cent.
I have also carefully queried the figure of 36 per cent. for 1959–60 and I find that the forecast concerned showed two figures for this year: the first was a figure of 27·9 per cent. estimated profit on sales of £2,780,000, and the second was a forecast profit of 36 per cent. on the much smaller, indeed comparatively insignificant sum of £155,000 in respect of a contract which was not at that time firm.
It is abundantly clear that here is an error, and the figure of 36 per cent. should never have found its way into the Report. I do not suggest that that error arises from anything more sinister than a careless reading of the figures, but it is clear that the weighted averaged is in the neighbourhood of 28·7 per cent. and that that percentage and not 36 per cent. should


have appeared in the Report as the forecast profit for 1959–60.
With regard to the second five-year forecast, for the years 1963–64 to 1967–68, showing estimated profits on Government repair contracts of between 41·1 per cent. and 48·9 per cent., the company says that these figures appeared in a schedule to the main document, which subsequent research has shown was not attached to that document when it was placed before the board, and it should have seen that document. The document itself showed a number of more generalised figures, from which it would have been quite impossible to extract any figures indicating any forecast percentage profits on Government repair contracts. Further, the company says that it was never put to any members of the board when they were giving their evidence that they had seen either of these five-year forecasts. If this had been done, as it undoubtedly should have been, these errors would not have been made.
I now refer to the managing director's monthly reports referred to in paragraph 84. They were the only other "instruments of financial control" available to the board. Having concluded that the board was not given nearly as much or as detailed information as was available to the executive committee, this paragraph concludes:
As against all this, the Board were made aware in 1959 and 1960, by means of the Managing Director's monthly reports to which we have referred, that the profit rate on over-hauls (Departmental and civil combined) was high, and by 1960 was in fact nearly 55 per cent. on cost. They had no reason to suppose that the profit rate thereafter declined. They were content to leave such matters to the Executive Committee.
It is significant, in this regard, to find from the company's statement in paragraph 4.24, that only four of the 20 managing director's reports during these three years included information on these contracts. The first three of these submitted during Bristol Siddeley's first year of trading, showed a falling trend of overall profits for repairs, while in the fourth, which in fact indicated this profit of 54·8 per cent., this information was contained in a single line of a 12-page document and gave only a summary of sales for the first five four monthly periods.
There is no dispute that the Board had previously seen the five year forecast of profits on Government repair contracts which not only showed very much lower levels of profits—in the region of 26 per cent. for this and the three following years—but also indicated in two out of three of those years a marginal fall. The Committee's comment to the contrary—I regret to say this—therefore stands exposed as a wholly unnecessary and unwarranted innuendo. It is not supported by the facts in its own document. It is, unfortunately, not the only comment of this nature; and these comments cannot but detract from the openness, fairness and impartiality attributable to the findings.
It is to be noted in these managing director's reports that no distinction was made between departmental and other contracts. It is, unfortunately, not possible to ascertain with any accuracy from the Wilson Report itself what indication an overall figure of 54·8 per cent. would give as to the percentage of profits being earned for this period solely on departmental work. But if the figures for 1960. which can be extracted from the five-year forecasts and which are reproduced in paragraph 77, are largely accurate, it would seem that profits on Government repair work were likely to be substantially lower than overall profits on all repair contracts. I understand that at the time there were a number of civil contracts with foreign airlines on which very high rates of profits indeed were earned. I am glad to note that the President of the Board of Trade thoroughly approves of this level of profits when dealing with foreign customers.
We have thus the position in which the only figures available to the board which indicated future profits in fact ranged from 26·1 per cent. to 28·7 per cent. and the higher figure indicating profits actually achieved on both Government and other contracts combined was the 54·8 per cent. mentioned in the managing director's report.
The Wilson Committee concentrated its detailed investigation almost exclusively upon the contract concerned with Sapphire and Viper engines. It was dealing with overall profits for the period in question of 114 per cent. on the one and


110 per cent. on the other [Interruption] I wonder if hon. Members opposite could carry on their conversation elsewhere.

Mr. Barnett: The hon. Gentleman is talking so much.

Mr. Corfield: I have no doubt that the hon. Gentleman will have the opportunity to express his own views. It was dealing with rates of profit of 114 per cent. and 110 per cent. respectively. Even, therefore, if this figure of 54·8 per cent. had in fact represented a profit on Government work alone—and it is specifically stated that it did not—it can by no stretch of the imagination be deemed to convey either knowledge of, or an intention to, budget for profits of more than double that percentage. It therefore follows that the bald statement in the conclusion that
the approximate extent of the profitability of these contracts was at the time known to the company at all levels of management
is manifestly untrue.
Nor is there any evidence whatever that the board either themselves budgeted for, or knew that the executive committee had budgeted for, profits of anything like that order. Indeed, if budgets or forecasts for the first year of trading are excluded, as well they might be, the forward estimates available to the board indicated profits on Government work for the years in question in the region of 26 per cent. on cost, a figure closely in line with Sir Ronald Melville's 20 per cent. to 25 per cent., also closely in line with the Government's own criterion for submission to the Review Board of 27½ per cent. on capital employed, and less than one quarter of the profits actually achieved. Such, then, is the evidence on this issue.

Mr. Lubbock: Has the hon. Gentleman referred to paragraph 80 of the Wilson Report which contains a description of two meetings of the executive committee to consider individual figures of overall percentage profits on various engines? The executive committee at its first meeting decided that the profits of 44·8 per cent. on the Viper were too low and therefore, by implication, it must have considered the other figures in this table extending up to 78·7 per cent. for the Sapphire 6 and had thought that they were satisfactory.

Mr. Corfield: I am delighted that the hon. Gentleman has enjoyed his sleep, because I was talking about the board and these paragraphs relate to the executive committee.

Mr. Lubbock: The hon. Gentleman did not refer to that paragraph.

Mr. Corfield: I am coming to that paragraph, because I am referring to the board and not to the executive committee.
I am discussing the board. It is clear that the special reports to which the hon. Member refers came to the executive committee, and to that committee only. This, as I have summed up, is the evidence on this particular issue—the only available to the board. Far from showing that the chairman and other non-executive directors knew of or budgeted for exorbitant profits, it conclusively proves the reverse.
Is this really the sort of evidence on which any decent ordinary citizen, let alone one with the responsibility of a Member of Parliament or a Minister, will convict? Is this the sort of evidence on which the Minister exacts the penalties that he has exacted this afternoon?
Nevertheless, the question arises as to whether the board ought to have had knowledge, or ought to have so arranged the management structure of the company to ensure that it did. With regard to contract details the board was, as the Wilson Committee comments,
content to leave such matters to the executive committee".
The company's riposte that
this, so far from being a cause of criticism, that is obviously implied, ought surely to mean no more than normal delegation of detail to those directly concerned
seems to me to be both reasonable and justified. After all, there were 89 separate overhaul contracts and 149 repair and spares contracts, covering 13 engine types, and upwards of 2,700 different spare parts for which quotations were submitted. Is it seriously suggested that this should be the concern of the chairman of a company? This represented in total only some 6 per cent. of total sales over the five-year period to 1964, of which the Sapphire and Viper contracts were approximately 50 per cent.
In considering this question of the vicarious responsibility of non-executive members of the board and the implication that they were negligent in failing to take on the more detailed matters of administration for which responsibility had been delegated to others, it is pertinent to draw a comparison with the Department. The officers of the Contracts Directorate and the Directorate of Technical Costs were responsible for Government contracts involving vast sums of public money, and I understand that they number about 10,000 contracts a year. The combination of the P.A.C. Report on Ferranti, the first P.A.C. report on Bristol Siddeley, the Lang Report and the Wilson Report leaves one staggered at their ineptitude.
Constitutionally the permanent secretary of a Department is the accounting officer. Nobody has suggested that successive permanent secretaries are personally responsible or even, it seems, vicariously responsible, at any rate to the extent of its being deemed appropriate to take any form of action which would interfere with their careers or damage their public reputation. Yet the responsibility of Sir Reginald Verdon-Smith in his capacity as chairman is, I suggest, very closely analogous to that of successive permanent secretaries. Nobody who reads the national Press, let alone the local Press, circulating in my constituencies, can doubt the damage already inflicted upon the career and reputation of Sir Reginald Verdon-Smith, and nobody can doubt that the Minister's speech today has added immeasurably to that damage.
I come to the dismissal announced today. If the Government studied this Report before they decided to publish and accept its conclusions, they must have been fully aware of most of the defects to which I have referred, and they could easily have discovered the others. If they failed to conduct such a study, they were grossly negligent and, because of their position and responsibility, every bit as negligent as anybody in Bristol-Siddeley, even on the most adverse reading of the Report.
If, however, they did study the Report, they must have known that in many respects it was unfair. Thus, either they simply did not care for justice or they deliberately intended to be unjust for

some ulterior motive best known to themselves—and the Minister's announcement today confirms the latter.
If it is the present Government's philosophy that the vicarious responsibilities vested in a chairman—and this is all that can be fairly and honestly charged against Sir Reginald Verdon-Smith—requires resignation or dismissal from bodies which have nothing whatever to do with the affairs for which he was vicariously responsible, then Lord Robens' resignation should have been accepted; and if it was not voluntarily forthcoming it should have been peremptorily demanded—and he should have been dismissed from any other public positions he might have held at the time.
If that were the Government's philosophy, few of the present senior Members of the Government would be sitting on the Front Bench opposite. But it is not their philosophy. They have shown that they are not in the least concerned with principles—[Interruption.]—and that they have indulged in a vicious victimisation of a dishonourable nature.
In coming to the question of the executive committee, I can answer the question asked earlier by the hon. Member for Orpington. It is almost impossible, I suggest, to doubt that the "instruments of financial control" which I have enumerated did, in fact, give more than adequate information from which to appreciate the very high profits being earned. The contents of the Special Reports and recorded comments of the executive committee thereon, described in paragraphs 79 to 81, are particularly damning because they show not merely that the information was available, but imply that the rates of profit were studied and considered.
The source of the Wilson Committee's information in regard to the executive committee's instructions to those concerned to study the First Special Report further, and of the executive committee's comments that profits shown were "adequate"—when they ranged from 78·8 per cent. to 35·5 per cent. on cost, and later "good", when they ranged from 142·6 per cent. to 45·4 per cent.—is not disclosed. But it must be presumed that these matters were recorded in the minutes, and presumably the minutes were at some stage approved.
That the level of the profits achieved on these contracts was exhorbitant can be neither denied nor defended, and it is not my purpose today to do either, let alone to excuse in any way the fact of double charging. The responsible members of the executive committee certainly had available information which should have put them on the alert, and it must either be accepted that they were negligent in attending to these matters or that they deliberately condoned profits of this order. Nevertheless, I suggest that the company's argument that it was entitled to judge these matters on the basis of the overall profitability of its Government contracts, rather than contract by contract, seems to have received far less than adequate attention.
The Wilson Committee dismisses the "overall profitability" argument on two grounds; first, that it involves a conscious adjustment of figures upwards or downwards to some as yet undefined norm—a process regarded by the Committee as not only difficult, but in most cases also requiring the agreement of the Ministry. After all, if the overall profit rate on Government contracts is to be taken as only 13·5 per cent. on cost, as stated in paragraph 177, and two of these contracts were yielding over 100 per cent. and the remaining four averaging 47 per cent., with an out-turn of about £4 million in excess profits, there must also have been some very unsatisfactory contracts involving very large sums.

Mr. Austen Albu: Is the hon. Gentleman speaking to the Amendment, which accepts the Report except for certain parts of it, or is he speaking to something else?

Mr. Corfield: If the hon. Gentleman had been in his place when I rose to speak he would be aware of the subject in hand.

Mr. Albu: I have heard all but five minutes of the hon. Gentleman's speech.

Mr. Corfield: It is abundantly clear from the letter from Sir Richard Way to Sir Reginald Verdon-Smith, dated 20th March, 1966, and published in the Second Special Report of the Committee of Public Accounts for 1966–67, that the Ministry, in March 1966, accepted that the firm was entitled

…to look at the rate of profit on its Government work as a whole, and that I agreed that the overall rate of such profit would certainly be the product of considerably varying rates on individual contracts, extending probably from losses at one end to profits considerably in excess of the 'normal' Government rate at the other. I also said that on the evidence before me I had no reason for doubting your Statement that the overall profit made by your Company for the years concerned was not unduly high.
Later, Sir Richard comments
…that it is obviously a matter of judgment —a not very easy judgment at that—as to when a profit rate can be regarded as legitimately high and when it becomes excessive.
He goes on to infer that profits between 90 per cent. and 150 per cent. cannot be regarded as anything but excessive, and with that I do not think that anyone would disagree.
In these circumstances it seems remarkable that while the Wilson Report follows Lang and rejects the overall profitability argument, and while paragraph 109 of the Report refers to this letter from Sir Richard Way, this particular passage is not referred to, and nowhere else in the Report is there a mention of the fact that the Bristol-Siddeley view that it was legitimate, at any rate within reason, to expect to gain on the swings what is lost on the roundabouts, was at least shared by the Permanent Secretary to the Ministry concerned long after the publication of the Lang Report, and the initial disclosure of these excessive profits by Bristol-Siddeley. As a result—

Mr. Robert Sheldon: On a point of order. The Motion states
That this House accepts the conclusions of the Report of the Committee of Inquiry into Certain Contracts made ith Bristol Siddeley Engines Limited.
The Amendment is designed to add
except in so far as they condemn identifiable individuals denied, by the procedure adopted, the basic rights of natural justice".
Does the hon. Gentleman accept the first part of the Motion?

Mr. Deputy Speaker (Sir Eric Fletcher): Is the hon. Gentleman raising a point or order?

Mr. Sheldon: Mr. Sheldon indicated assent.

Mr. Deputy Speaker: It was not obvious that he was doing so.

Mr. Sheldon: My point of order was to ask whether or not the hon. Gentleman was speaking to the Amendment.

Mr. Deputy Speaker: The hon. Member for Gloucestershire, South (Mr. Corfield) would be out of order unless he were speaking either to the Motion or to the Amendment. He is entitled to make his speech in his own way. However, it is reasonable for me to point out that a large number of hon. Members are anxious to take part in the debate before the time arrives when we will have to conclude it.

Mr. Corfield: Although I regret the length of my speech, I trust that hon. Gentlemen opposite will appreciate the relevance of my remarks because I regard this matter as of the utmost seriousness and because, apart from my position as an hon. Member in wishing to stand for the rights of individuals, my constituents are keenly interested in this subject. I therefore propose to continue with my speech.
As I was saying, as a result, nowhere does the Wilson Committee consider these overall profits on Government contracts as such, let alone comment on their reasonableness. While it might be possible to obtain some indication of overall profits on Government business from some of the "instruments of financial control", it is wholly impossible to do so from any of the extracts published in the Report. All that appears in this connection are consolidated figures for the four-year period 1959–60 to 1962–63, extracted for the purposes of investigating the related, though quite different, dispute in regard to the admissibility of taxation costs. I would have commented on this matter but, in view of your remarks, Mr. Deputy Speaker, about the time available for the debate, I will leave the matter there.
Although overall profits as shown in the company's published accounts give no indication as to the breakdown between Government and non-Government customers, the Wilson Committee at least does not dispute that these profits were "no more than reasonable". It is also known from the P.A.C. proceedings that on some Government contracts the company recorded a loss. There is no mention of this in the Wilson Report, and no figures from which it is possible to relate

profits on particular contracts to losses being incurred at the time. This is a very unfortunate omission.

Mr. Edwin Brooks: Mr. Edwin Brooks (Bebington) rose—

Mr. Deputy Speaker: I hope that hon. Members will not intervene because large numbers of Members on both sides are anxious to take part in the debate and interventions only prolong the hon. Gentleman's speech.

Mr. Brooks: I note your comments, Mr. Deputy Speaker. I was simply going to ask the hon. Gentleman if he is aware that in its Second Special Report the Public Accounts Committee came down quite unequivocally against the company's introduction of S.C.43.

Mr. Corfield: I fully agree, but with due respect to the P.A.C. I do not believe that it is really the ultimate judicial authority on contracts.
It was an unfortunate omission, because the second ground on which the Wilson Committee rejects the overall profitability argument is the contract. However convenient it may be for the taxpayer to adopt the interpretation adopted by Wilson and the P.A.C. it is not the only interpretation regarded as appropriate by some very distinguished members of the Bar. What is quite clear here is that there is a real element of doubt as to what that contract actually means. The Attorney-General will no doubt agree that it does not produce a contractual obligation such as would give a legal remedy in a court of law for failing to estimate reasonable prices. It probably should do, but the plain fact is that it probably does not. There is an element of doubt, and the benefit of that doubt should have gone to the people whom the Wilson Committee at that stage had put in the position of the accused.
These are serious defects. It has not been my wish to denigrate the work of Sir Roy Wilson and his Committee, but it is my duty to put forward, as I believe I have done, the real grounds for disquiet that justice may not have been done. If in doing it I have inevitably had to criticise the Wilson Report that is something I regret but which I regard as of far less importance than justice to individuals.
Let us remember that there were basic defects in the procedure. The hearings were conducted informally and in private. Documents were made available to the Committee by both sides, but not to each other. Witnesses had no opportunity to hear or see evidence, however damaging, given by other witnesses, let alone to cross-examine. There was no verbatim record of the evidence, though notes on each witness's evidence were made and submitted to him for agreement. It was agreed that the names of witnesses should not be mentioned in the Report. B.S.E. executives, however, are throughout referred to by the position they occupied and are readily identifiable. On the other hand, the activities of the Ministry are referred to collectively by sub-Departments—D.T.C., Contracts Directorate, D.A.S., A.I.D., and so on, and individual officers remain wholly anonymous.
In adopting this procedure the Committee considered that it could not do better than to follow the procedure of Lang. As I tried to point out earlier, there is a striking difference in the issues they eventually decided to investigate. That is the gravamen of our charge against the procedure used. Throughout its Report, the Wilson Committee is concerned to investigate actions and motives of individuals and their culpability.
I wish to conclude on this note. Of course, this has been a very sad affair for Bristol Siddeley and my constituents who depend upon it. But it is a much sadder affair for the Government to ask us to accept conclusions arrived at by that procedure, arrived at by reasoning which can be shown to be false and which has such damaging effects on individuals.

An Hon. Member: You are accepting the Report.

Mr. Corfield: In being asked to accept these conclusions without any qualifications, as we are asked by the Government, we are forfeiting as a House any right we have to respect as remaining an important part of an honourable concept, the High Court of Parliament.

5.55 p.m.

Mr. Maurice Edelman: The hon. Member for Gloucestershire, South (Mr. Corfield) has very

closely followed the brief, or perhaps I should say the apologia, circulated to all Members of Parliament by the Bristol Siddeley Company. He has spoken with great sincerity on behalf of his constituents. I, too, should like to declare an interest, in that the main Bristol Siddeley factory referred to in all three Reports is located in my constituency. Therefore, I shall discuss the matter not only as one of national interest but as one which is of immediate concern to those who are employed in the Bristol Siddeley factory in Coventry.
It should be made clear right from the start that the subject of the debate is the financial integrity of the Bristol Siddeley board of directors and of the executive committee and those whom it instructed. At the same time it is proper to emphasise that the technical and aero-engineering competence of the company has never been in question. It has been, and remains, a source of pride to the whole nation.
The charges in the three Reports are two-fold. The central charge is that the Bristol Siddeley directorate took advantage of the Ministry of Aviation in order to exploit the Exchequer. The second charge is that wilfully or negligently the company exploited and retained for as long as possible, according to the Wilson Committee, double and, it is even suggested in some cases, treble payments.

Mr. Ridley: Mr. Ridley rose—

Mr. Edelman: I should like to develop my argument. Perhaps the hon. Gentleman can intervene later, when I shall be very glad to give way.
Only the day before yesterday, in the document to which I have already referred, the company tried to exculpate itself from some of the charges directed against it in the three Reports. The Press described the document as biting and stinging but I should say that the proper adjective with which to describe it is "brazen", because the very fact of the repayment by the company of f3·9 million is an admission that the company had obtained excessive profits.
In this essay in self-justification, the Bristol Siddeley company has engaged in an exercise in semantics. While rejecting the charge in the Wilson Report that the profits it made were exorbitant, it added that the profits were "unreasonably


high". I am sure that the House will take the view that whether Bristol Siddeley's profits were exorbitant or unreasonably high the victim of these exactions was the nation. It was the taxpayer who was being plundered without conscience. It was the defence Services which had to forgo certain projects which they had in mind precisely because there was this form of over-charging which had elevated their apparent costs to a level which the nation and the House would not tolerate.

Mr. Ridley: The hon. Gentleman said at the beginning of his speech that the Bristol Siddeley board had combined to defraud the Exchequer and to condone high prices and double-charging. I am sure that he does not mean the Bristol Siddeley board. I am sure that he means the persons responsible because, as my hon. Friend the Member for Gloucestershire, South (Mr. Corfield) clearly showed, the Brisol Siddeley board was not responsible. Would the hon. Gentleman be prepared to repeat that outside the House, so that it can sue him?

Mr. Edelman: The hon. Gentleman has been long enough in the House to know that it is the privilege of Parliament that hon. Members may make statements here in which they believe, which they will seek to justify, and which they regard as appropriate for debate in the House. That is what I have sought to do.
In the defence which the Bristol Siddeley company has put out, it rejects the suggestion that profiteering on the Sapphire and Viper contracts as distinct from overhaul work generally was known
at all levels of management, since this very imprecise phrase unduly implicates the Executive Committee and wrongly implicates the Board".
The suggestion in this statement is that those in charge of the company were unaware of the profiteering which they later acknowledged. I must say that I do not believe that, despite what the hon. Gentleman said. I cannot believe that in any competently run company the executive committee and the board were unaware at their regular meetings that these large profits were being made from Government contracts. If they were unaware of it, they were incompetent. If they were aware of it, as I believe they were, and as has been demonstrated by these Reports, they were guilty of the

charges of gross profiteering which have been made.
For my part, I have a sufficiently high regard for the technical competence and financial management of the Bristol Siddeley company to think that these high profits could not possibly have escaped their attention. They knew exactly what was going on, and it was only at a much later stage, when these matters were discovered, that they felt obliged to make a confession—that is the only word for it—and to try to make amends for what they had permitted to be done by offering certain repayments, not the repayments finally made, repayments which were a token of the admission that they had over-charged.
The question of profitability has been raised in the debate, and it is taken up by the company itself in its document. There is a contradiction here because, if the board of directors and the executive committee did not know that these high charges were being made, then they would not put the argument forward. However, the suggestion has been made that, at a certain point, the excessive profitability of these contracts was admitted by the board and the executive committee but it was justified by them on the ground that it was necessary for the company to take an overall view of all the projects on which it was engaged in the interests of the country, the argument being that they did not feel obliged to isolate the individual contracts referred to in these Reports and, for that reason, felt themselves entitled to extract these high profits on the particular contracts referred to.
This is an argument sometimes put forward by drug manufacturers when they seek to justify their own high profits and to explain that a lot of the profit which they extract goes into research and development. But in the case of these contracts the argument that high profitability was necessary in order to encourage research and development in other areas does not hold water. Research and development on contracts for other projects was an element negotiated between the company and the Ministry, and there was, therefore, no justification whatever for these contracts being used in order to try to extract excessive profits which could then be attributed to other projects. On the contrary, the very fact that there is the provision dealing with "fair and


reasonable" prices in SC 43 is itself a reason why the contracts referred to in the Reports should be considered in isolation and each identified according to the amount of profit made.
In its 1966–67 Report the Public Accounts Committee said that the company
continued year after year to submit quotations and to agree prices which they knew to be so far in excess of costs as to yield enormously high profits",
sometimes over 100 per cent. In the face of that Report, it is impossible for the hon. Gentleman's argument to hold water when he seeks to defend the company against a charge of having made excessive profits on these specific contracts.

Mr. Corfield: With respect, I did not do that. The point I made was that, in the light of the Permanent Secretary's letter, I thought it odd that the Wilson Committee had merely dismissed out of hand and given no consideration to that argument. I quoted from the letter. At no time did I seek to defend the level of profits on that or any other contract.

Mr. Edelman: The Wilson Committee was right to give little attention to that argument about overall profitability for precisely the reason which I have advanced, namely, that the research and development elements relating to other activities of the company were already covered in Ministry contracts. It was proper, therefore, to consider these particular contracts in isolation and not to muddle them up, as the company has sought to do, with other projects on which it is engaged.
In presenting the directors with, as it were, a halo and wings, the hon. Gentleman overlooked some of the curious conduct of certain members of the board, at least since these events. There is, for example, the mystery of the chief estimator. We have all noted how, in recent weeks, a great deal of the defence by the board of its own procedures and a great deal of its attempts to identify responsibility has been expressed in a sort of covert attack on the chief estimator.
I understand that the chief estimator was not summoned before the Public Accounts Committee. Perhaps the Chair-

man of the Public Accounts Committee may later in the debate be able to tell us whether he was summoned, and, if not, why not. He is a key element in the whole of this issue. If there is one thing certain in the question of who profited from the over-charging, it is that the chief estimator himself was not one who profited from these transactions. The chief estimator presented certain accounts to the negotiators, who then went on to negotiate the contract.
Since the publication of these Reports, it seems that the chief estimator has been retired into inarticulate obscurity. He has, so to speak, been smuggled out of the way. He has been retired from his job, and no one has heard what he has had to say. No one has heard who gave him the instructions. No one has heard on whose orders he was acting when, year after year, he arranged these particular contracts. Therefore, the first mystery to be solved—and anyone considering the problem ought to try to solve it—is how it comes about that the chief estimator has been made the scapegoat in these matters. In addition, two subordinate estimators were temporarily retired and have since been restored, not to their previous jobs but at least to other work.
It seems to me and, I think, to many hon. Members, that if we are talking about natural justice, we ought to consider the question of natural justice for the chief estimator and those subordinate to him.

Mr. Lubbock: It was not the chief estimator who conducted the negotiations. It was someone called the price controller, was it not?

Mr. Edelman: The hon. Gentleman has misunderstood me. I am talking not about the price controller but about the chief estimator in the firm of Bristol Siddeley and two of his subordinates. I am pointing out that here is a key figure who, in my view, has been ill served by the company. He has been ill served by his superiors. Those who are seeking natural justice for themselves should seek natural justice for their subordinates and not try to make them into scapegoats.
The hon. Member for Gloucestershire, South in referring to profitability, talked about the other concerns of the board


of directors of Bristol Siddeley and of the executive committee on these occasions, when the Government contracts under consideration fell into a relatively small position. Indeed, Bristol Siddeley, in its defence, says that, in the light of the 1959 merger, at the time of these contracts it had to concentrate on matters of "greater immediacy and importance". But I think that no matter of greater immediacy and importance for Government contractors exists than to ensure that their methods and conduct are honest and in the public interest. It is no defence for the directors to say that their minds were distracted by other matters of immediacy and importance. It does not justify the fact that they were tolerating, whether negligently or deliberately, a situation in which these fantastic profits were made.
The Ministry is very deeply involved in these affairs. The officials of the Department do not come very well out of this matter. Indeed, I must add that, in the final settlement, the Ministry seems to have been absurdly generous to the company. The Wilson Report pointed out that, if the company had been left with no more than 20 per cent.—quite a high figure—on costs, the refund should have been £5·13 million and not £3·96 million. In other words, the Wilson Committee says—and I support its conclusion—that the company has got off extremely lightly.
It is right and proper—and I understand my right hon. Friend's position—that he should seek to defend his Department and his Departmental officers, but if it is established, as I think it has, that there has been connivance in negligence between officers of his Department and officials of the company, the matter should not be left as it is. It is not enough merely to tell the officers concerned that they have fallen below the level of their task. I believe action should be taken in order that they should not have any further opportunities of engaging in negotiations or concluding contracts which are so much to the disinterest of the country.
The company itself, in a somewhat casual way, tries to push off responsibility on to the Ministry. Although I have permitted myself a few harsh observations about officials of the Ministry, I do not believe that the company should be

allowed to get away with it in this way. But all it says in Part 10 of the Report which has been circulated to hon. Members is that the Wilson Committee's detailed criticisms of the Department "speak for themselves". This is, in a sense, very high-minded stuff on the part of the company. But what emerges clearly is that there was a sort of "old boy" relationship between the Ministry officials and officials of the company which is intolerable taking into account the matters involved.
There has been little record in writing of the conversations or the conclusions reached between Ministry officials and officials of the company. That has been one of the great gaps in the evidence available. Just as during the D-notice examination it was alleged that there was an over-close association between officers of a Department and those whom they sought to serve, so I believe my right hon. Friend should take this opportunity of examining very closely the relationship which has existed and which exists today between officers in his contracts department and their customers.
But having said that, I do not believe that the incompetence or the innocence of the Ministry officials is any justification for the sophisticated board of Bristol Siddeley to have taken advantage of them. Just because the till is left open is no justification for a trusted servant to put his hand into it, and I believe that what happened is that the innocence, ingenuousness, perhaps even incompetence, of certain members of the Ministry of Aviation's contracts department were such that there were members of Bristol Siddeley who abused that knowledge and were able, to the disadvantage of the country and the taxpayer, to extract so much from them.
Finally, I come to the question of the justice of the matter. I am satisfied that the spontaneous and unanimous conclusions of the Reports about profiteering by the company are fully justified. I think it right that all of it should be exposed to public view. I have only one hesitation in giving the conclusions my full endorsement. That hesitation does not spring from the fact that I doubt the conclusions of the Wilson Committee or of the Public Accounts Committee, but from the fact that it is my firm conviction, having had some


association with the aircraft industry over many years, that what we see in these Reports is only the tip of the iceberg.
I believe that, owing to the slackness of accounting on the part of the Ministry of Aviation there are opportunities available which have been exploited by some of its customers, running right down through the aircraft industry. I believe we have seen only the top of the abuses and I hope that from now on those abuses will disappear. Double charging, the possibility of treble charging—all these are very grave public scandals, and if the company or any members of the company are dissatisfied with the rough justice with which they claim to have been dealt, it is always open to my right hon. and learned Friend the Attorney-General or the Director of Public Prosecutions, now that yet more evidence has been made available on what appears to be collusion in order to exploit the Exchequer, to provide another forum for them to plead their case.
In the past I have sometimes been critical of the Government's aircraft policy because projects have had to be cut rather than the efficiency of the industry improved. What we read in these Reports gives a clue as to why the cost of projects has soared to such a point that they have had to be cut. Whatever the result of this debate, I hope that it will include incomparably tighter control of costs than in the past and that the guilty men who have exploited the nation's needs will be deprived of an opportunity of exercising any further their negotiating talents in connection with Government contracts or the rapacity of which they have shown so much evidence.

6.18 p.m.

Sir John Vaughan-Morgan: At the beginning of the debate, Mr. Speaker, you asked if it would be to the convenience of the House to take these two Motions together, and that request was of course accepted. Nevertheless, I would like to make a protest not to you but to the Leader of the House that an important Report on a narrow issue by the senior Select Committee of this House should be taken and spatchcocked into a debate on a report of quite a different nature.
The debate is bound to range fairly widely, but the House should at once recognise that the issue with which the Public Accounts Committee was concerned was a narrow one and it would be unfair to that Committee and to the House if that were not taken into cognisance. I regret very much that they are being discussed together. For that reason I shall confine myself entirely to the Report of the Public Accounts Committee since I took the Chair. The House knows the reason why my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) was unable to take the Chair and that in the result I was called to the Chair. I cannot pretend that it was a very welcome task.
I begin by paying a very warm tribute to all my colleagues for their patience and diligence—and, my goodness, we were diligent—and, last but not least, for their tolerance of the Chair, particularly as there were differences of view among us. It should also go on record that the Public Accounts Committee, which I think can truthfully be described as an authoritative and even an awe-inspiring body, on this occasion was rather short in attendance. Only nine out of 15 members were able to take part. In view of the divisions, it is worth noting that perhaps if others had been present there might have been a different outcome.
I begin by saying a word about our procedure. It was not, of course, a judicial process; Sir Reginald VerdonSmith and Mr. Davidson were not facing formal charges. The facts are that they appeared last year as witnesses before the Public Accounts Committee and were invited this year to appear again because, as I said in my statement:
When the Wilson Report was published, certain doubts were expressed, both in Parliament and in the Press, which clearly needed to be settled one way or the other as soon as possible as much in your interests as anyone else's and we felt it our duty to under-take that task.
The witnesses asked to be accompanied by counsel, which was agreed by this House. It was the witnesses' own wish, but I think that in the event my colleagues would agree that our procedure and decisions were not affected. I am not sure that if a parallel case occurs again I could find it in my heart to


recommend to the House that it was necessarily wise to bring counsel in. Counsel made a submission about procedure which the Committee did not accept because we felt it misconceived the nature of our inquiry, would have required formulation of charges against the witnesses, and converted the Committee into a court of law, which was just what it was not, and it was anxious not to pretend to be one.
There were no accusations. The witnesses were asked to comment on their previous evidence. We followed the usual procedure of questions and answers between the Committee and witnesses, and counsel had every opportunity to put further questions or to address the Committee. Given the circumstances, it cannot possibly be said that our procedure was contrary in any way in practice to the principles of natural justice.
The present Report is concerned with a very narrow issue, as to whether the witnesse' evidence last year was misleading or inadequate or, more important, whether it was deliberately so. The issue here is quite different in substance from the issues in the Wilson Report or last year's Report by the Public Accounts Committee. Whatever our findings in this Report, last year's P.A.C. Report still stands and in many ways is confirmed and reinforced.
Last year we blamed the Ministry on many scores, particularly the ineffective work by technical costings officers. We blamed the company as we saw it for many things, seeking unjustified profits and putting forward a defence which we maintained was based on a quite unwarranted interpretation of the contractual term "fair and reasonable". Whatever the legality of the thing may be, this is how we saw it. Lastly, we blamed the company for an unreasonable attitude to the Ministry in negotiations about a refund. Above all, we blamed the company for what seemed to us a certain laxity in financial administration. This year the Committee found that its strictures were understated. We condemned again in particular irresponsibility and inefficiency in the administration after making the utmost allowances.
These are all serious and, I think, justified, criticisms of the company as a company, but none of these criticisms, whether the House agrees or not, proves

or disproves the veracity of the evidence which Sir Reginald Verdon-Smith and Mr. Davidson gave to the Public Accounts Committee last year. That is the issue with which we were concerned this year, and that is what we tried to do by considering the evidence line by line.
There were four points for examination. The first was the most difficult and most important. At the risk of over-simplification, I would describe it as the extent to which before 1964 "higher management" had detailed knowledge about the very high profits on overhaul contracts. Last year, we concluded that the directors, including the executive directors, only knew about them in general terms, but the Wilson Report implied that the executive directors had the full details. This was the discrepancy which we sought to examine.
We were told by the witnesses that the executive directors did have the full details circulated to them, but they either did not read them or remember them, and they could not, therefore, be said to have knowledge of them at the material time. The witnesses claimed that nothing they said last year was inconsistent with this. The Committee was unanimous in thinking that last year's evidence was confused and inadequate and often used words and expressions capable of more than one meaning. The explanations which we received only underline our last year's criticism of the way in which the company had conducted its financial affairs, but on the central point we were, unfortunately, divided.
No member of the Committee could identify any passage in last year's evidence which could positively be characterised as untrue in the light of the explanation offered. All the evidence could be satisfactorily explained. Only by my casting vote was the Committee prepared to say positively that at no point in their 1967 evidence were the witnesses knowingly attempting to mislead the Committee.
I digress at this stage for a moment. The Minister, in his speech, quoted from paragraph 18, I think, and referred to the fact that we said that their evidence
was inadequate and confusing and fell short of the accurate, complete and frank response to the Committee's questioning which the Committee were entitled to expect.


But he should have read that in conjunction with paragraph 38, which sets out how the position arose last year.
We began by saying we had had a difficult task and we pointed out how our examination arose last year. Part of it—this is in answer to the hon. Member for Coventry, North (Mr. Edelman)—was that
Since it appeared to the Committee…that their enquiry might give rise to criticisms of the Company, as well as of the Ministry, they invited the Company as well as the Ministry to give evidence.
In order that the company should give evidence, Sir Reginald Verdon-Smith was summoned as chairman and Sir Reginald nominated Mr. Davidson to accompany him.
Another important fact should be borne in mind in considering a point which the right hon. Gentleman the Minister took out of its context, that the Report adds:
No statement of the facts which could have been derived from a scrutiny of the Company's papers was before the Committee of 1967 and the witnesses may well have failed to appreciate that in these circumstances the Committee would wish to question them about those facts and that they ought to prepare themselves to give evidence accordingly.
That is part of the background to the sentence which appears in the earlier part of the Report.
Could I, in amplification of this, say that normally the Public Accounts Committee has before it accounting officers of various Ministries who are used to the procedures of the Committee and who "know the form", if I can put it so succinctly. I am always full of sympathy for those accounting officers because it is a pretty terrifying ordeal for them. But I am equally sympathetic to members drawn from the field outside the public service who come before a committee of this standing and this authority, not as well briefed, in my opinion, as they should be, but also being willing to volunteer evidence on matters with which they have not had the chance to acquaint themselves as well as they should.
It was a difficult ordeal but we must go back to the issue with which this Committee was dealing, which was whether the witnesses were deliberately misleading the Committee. At any rate, by my casting vote on the main issue the Com-
 mittee held that they were not knowingly attempting to mislead the Committee.
There were three other issues of less importance with which I will deal as quickly as I can. On the third, which was the delay in withdrawing quotations, the Committee unanimously decided that there was no intention to mislead. I will not deal further with that. There were two others on which the conclusions of the Committee were rather left in the air. No one said there was an intention to mislead. The minority were of opinion that there was not but the majority were not willing to say that with certainty.
Another issue concerned double charging. Mr. Davidson told the Committee last year that so far as he knew, no one in the company—and I must emphasise those words—had known about the double charges. In the Wilson Report it was suggested that some people did know about those charges, but this does not at all affect the truth of Mr. Davidson's answer. There is nothing in the Wilson Report to suggest that Mr. Davidson himself had this knowledge, or which in any way controverts his evidence. Further-more, when Mr. Davidson did appear in 1967 the Wilson Committee had already been set in train. The form of the inquiry was known and Mr. Davidson, who was a witness before us, would know that all the evidence on this issue was eventually to go to the Wilson Committee; and it is quite inconceivable and insensate that anyone under those circumstances should even seek to mislead the 1967 Committee.
The last issue with which we dealt was simpler still. It related to an apparent discrepancy between certain figures given in evidence last year and certain figures in the Wilson Report. It is perfectly clear that there was a misunderstanding, and the only question was whether the ambiguity was intentional with a view to misleading the Committee. A minority was satisfied that there was no intention to mislead but the majority were not prepared to reach such a definite conclusion. I regret this. Confusion there was in plenty. The confusion was at one stage even worse confounded by the evidence given, but there could have been no purpose and no gain from wilfully misleading the Committee and, therefore, at the very least the Committee should have given the witnesses the benefit of the doubt.
The chairman of a Select Committee, when presenting a report—which I am not today—does not normally burden the House with his own views as opposed to those of the Committee. But this is exceptional since on each of these crucial issues there was a division in our ranks and the final Report does not represent the draft which I proposed as Chairman. Therefore, I must state categorically my own view that on all the issues the Committee had ample evidence from which to draw the right conclusion, which was that Sir Reginald Verdon-Smith and Mr. Davidson did not seek to mislead the Committee on any of these issues.
Let me add that this is in no way whitewashing, since the Committee has been free with its criticism of the company—twice now—but for different reasons. Some of that criticism must adhere to the witnesses who came before us. Today they have been treated to a measure of humiliation. They have done much public service. It might have been better in their own interests if they had devoted more of their time to their company's own affairs and avoided the charges of negligence and irresponsibility which the Committee had to find against the company. But I do not dissemble my deeper regret that the Committee did not produce a clear answer on all four points.
The Committee had set itself the task of resolving all doubts one way or the other and it owed this to the witnesses, to itself and to the House; and it failed to do so. Such confused conclusions do not enhance the reputation and standing of the Public Accounts Committee. It will not ease its future tasks in future sessions dealing with accounting officers in other spheres.
But there is this much to be said for this or any other Public Accounts Committee report—and I must point out the favourable parallel to the Wilson Report. The House and the outside world who read our Report can make its own judgments. It can follow the divisions and read all the evidence, the questions and the answers and the occasional meandering inconsequentiality of the evidence and the rather rococo syntax that sometimes appears on the printed page. It can judge not only the judgment but the judges. If this is done by those who read that Report without prejudice to

anything else they may have read, I feel that they and the House will reach the same conclusion as I do, that these witnesses did not mislead the Public Accounts Committee.

6.38 p.m.

Mr. Joel Barnett: As a member of the Public Accounts Committee, I should like to thank our Chairman for his kind tribute to his colleagues. Even though I was one of those who moved a number of Motions which were defeated due to his casting vote, I bear him no ill-will. I will deal later with some of the points he made on that.
I do not under-estimate the vital question of natural justice which has been raised in this debate, but I must say that I have found the attitude of the Opposition as expressed by the hon. Member for Gloucestershire, South (Mr. Corfield) an utter disgrace. It has meant that this debate has become bogged down on the wrong issue. It seemed to me that what he was saying when he spoke first for the Opposition today was quite contrary to what, in effect, the Opposition Amendment was saying, which was that they accept the Government Motion generally but want only to amend it in certain respects. It was not only a defence of individuals but it seemed to me, and I believe will seem to those who read it later, to be a complete rejection of the Report and a defence of the company itself. I am particularly sad because the P.A.C., despite some differences, has always deliberated free from party strife.
The hon. Gentleman has so turned the P.A.C. Report and the Wilson Report on their head that he has implied that it is the Minister and members of the Wilson Committee and the Department who should be impeached. It was a quite astonishing speech. The hon. Gentleman did the House a disservice, because if he had wanted, in a major debate, genuinely to make a defence of his constituents, as he was perfectly entitled to do, he should have done it from the back benches and not from the Front Bench. His was an utterly ludicrous view, and it will be seen to be ludicrous by anybody who reads objectively the evidence given to the P.A.C. and the Wilson Report.

Mr. R. Carr: Since the hon. Gentleman has pointed out that my hon. Friend the Member for Gloucestershire, South (Mr. Corfield) spoke from the Front Bench for the Opposition, he should admit, as the record will show in the morning, that my hon. Friend started by condemning unreservedly the exorbitant profits.

Mr. Barnett: It is a customary practice to say one sentence in doing that and to spend 45 minutes completely contradicting it. That is precisely what the hon. Gentleman did, as will be clearly seen in the morning.
The Wilson Report, in one sense, was unsatisfactory in that some of the evidence which the Wilson Committee heard, as referred to in its conclusions in paragraph 154 and paragraph 155, we did not hear. On the other hand, to have accepted any other method of inquiry, as has been suggested by the Opposition, would have made the position even worse, as the Wilson Committee said in paragraph 9 of its Report in discussing the methods of dealing with the inquiry. It said in paragraph 9:
We are satisfied, in retrospect,"—
that is, at the end of the inquiry—
that this method has enabled us to investigate as thoroughly as possible the matters we have had to consider and that we could not have informed ourselves so well in any other way".
The choice before the House is clear. We either accept the Report of three eminent, independent, unbiased reporters or the view of the company—and I do not blame it for being biased, but clearly it is biased in its own case. Without going over everything said in the Wilson Report or in the P.A.C. Report, there is no alternative for the House but to accept the Wilson Report.
What does one do about the question of personal justice? It was inevitable, when one set out the facts, that one was bound to refer to individuals; it would have been impossible not to do so. I accept that it would be a sad day if we were to treat the serious matter of personal justice as trivial. It is not a trivial matter. But the major issue before the House should be and is the relationship between Government and industry on major contracts involving the expenditure of thousands of millions of pounds of public money.
From any reading of the facts, it is clear that it was impossible for the individuals concerned in the Wilson inquiry to have been shown up in anything other than a very bad light. But we must balance the rights of the taxpayer against the rights of the individual. We had no mention of that from the Opposition Front Bench spokesman today.

Mr. Onslow: Would the hon. Gentleman allow me to intervene?

Mr. Barnett: I would rather not. The hon. Gentleman does not generally have a serious point to make, and we have a long way to go.
The gentlemen who appeared before the P.A.C. had every opportunity to present their case. I do not see how the House can do other than accept the Report, including the inevitable criticism of the individuals concerned.
I turn to the Third Special Report of the P.A.C. Again, there is criticism of two directors. It has been said on occasions that the P.A.C. sat as a sort of quasi-judicial body and that if we could not prove that what the witnesses said was untrue we should have given them the benefit of the doubt and found in their favour. To do that, we should have needed to ask them only one question consistently, and when they said, "No, we did not know anything about it", left it at that and said that we accepted what they said and that was the end of it. But we did not do that. We asked very many questions. It was not possible to prove the witnesses wrong. But if, after all that the witnesses said to us, the reasonably clear impression was given that they must have known that there was over-charging—

Mr. Onslow: No.

Mr. Barnett: It seems that I was right in not giving way—it was the duty of a member of the Committee to inform the House that the Committee could not come to a clear conclusion and that this was the impression given by the two people who came before it. I should have been failing in my duty to the House if I did not tell it that that was the impression which I formed from meeting those two people and hearing their answers and from my knowledge and the little experience which I have of industry and individuals.
That is why in the P.A.C. I moved a very important Amendment which was defeated by the casting vote of the Chairman. I should like to repeat the Amendment because it is very important and sums up the situation. It appears on page xx of the Report and reads:
Finally, on the question of the over-charging, the choice lies between two possibilities; either, one, the witnesses were aware, before 1964, that the profits on the overhaul contracts were more thin fair and reasonable; or, two, they were incredibly ill-informed on the source of a substantial proportion of the Company's profits. Bearing in mind the witnesses' knowledge of the affairs of the Company, to accept the second alternative would be to impute to them too great an ignorance. It is therefore Your Committee's impression that in the case of Mr. Davidson, and in lesser detail in the case of Sir Reginald Verdon-Smith, the first alternative applies.
This remains my view, and I think that it should be the view of anybody who reads objectively the evidence given to the Committee.
I realise the consequences if my Amendment had been accepted by the Committee and by the House. Only in this sense do I accept a judicial comparison. But one cannot allow the consequences of coming to certain conclusions to prevent one from coming to them. The Economist, in an article on 13th April, said:
The P.A.C. decided to accept this excuse and in doing so upheld the dignity of Parliament when to reject it would have been to embark on a course of more serious sanctions out of all proportion to the grubby little issue in dispute.
The Economist could not have been more wrong. I agree that it would have been out of proportion, and I have no wish to inflict further punishment on these two individuals. But we would have failed in our duty had we allowed that to prevent us from telling the House our impression and our view. In view of the remarks referred to by my right hon. Friend when he opened for the Government this afternoon, which represented the majority view, the Government had no alternative but to take the decisions they did about the public positions held by the two gentlemen concerned.
Before I leave the Public Accounts Committee Report, as there has been criticism all round of the Ministry, the individuals and almost everybody connected with this matter, it is right that I should say that I have my own criti-

cisms of the way the Public Accounts Committee decided on its method of investigation of private companies, and I accept my share of responsibility for it. I believe we took a decision in the committee which left us in an impossibly restricted position.
The situation arose from the fact that normally our main duties are to investigate Ministries rather than private companies. When we investigated this private company, we decided to have before us the chairman and one member of the board designated by him. By limiting ourselves in this way, we did not have individual evidence, and we were not able to give the clear answer that the Chairman of the Public Accounts Committee suggested we should have given. We could not come to a clear conclusion because questioning only these two people did not produce sufficient evidence. Although on the over-charging issue I came to the clear conclusion that these people did know, on a number of other issues I could not come to a clear conclusion and wished to tell the House so. That is why I moved the Motions that I did.
In retrospect, I would say to the House that the method of investigation decided on by the Public Accounts Committee was inadequate. We should either have seen none of the members of the company or we should have been much more thorough. But, of course, here is the nub of the problem. Had we done that, we should have been doing the job of the Wilson Committee. In future, if ever such an occasion arises, I can see no reason why the P.A.C. should not do that.
It will be seen from paragraph 178 of the Wilson Committee's Report that the Government are giving to companies of this description very substantial sums of the taxpayers' money. I refer to what are called taxation costs. The proportion of those costs provided by the Government, through the prices obtained, is so high as to mean that they are very much like the amount of money we provide for Ministries. If the P.A.C. is to investigate matters of this sort, I see no reason why it should not investigate private companies as thoroughly as they do Ministries.

Mr. Ridley: I want to correct the hon. Member. He said that the taxation costs have been provided by the Government.


In fact, these are costs which the company incurred on research and development and other matters. According to the calculation in the Wilson Committee's Report, as amended, these costs have been entirely charged to non-Government work, that is to say, civil work. If the hon. Gentleman doubts that, I can very easily prove it to him.

Mr. Barnett: I would ask the hon. Gentleman to read the Report again. By "taxation costs" the company mean bank charges, and private research and development, quite separate from Government research and development which the Government have specifically ordered.
I would not have thought it would be in dispute that much of the money for private research and development has been provided through the substantial profits made on Government contracts, and in this case overhaul contracts which represent only 6 per cent. of the sales of the company. Nobody who has read the figures will dispute that. Whilst I accept that there is great benefit to the nation from the money provided by the Government, it is equally true that the nation is entitled to a greater degree of control, and this seemed to be lacking in the speech of the hon. Member for Gloucestershire, South when he spoke this afternoon.
A most important aspect of the problem is the relationship between Government and industry. Even if my suggestion as to the method of control is accepted, will this be enough? In the past there has been over-charging and double charging, and we have allowed this to obscure the much more serious loss to the taxpayer through the inefficiency of British industry, which has been shown up by these inquiries. Although I am concerned about double charging and over-charging, at least the nation recovers a substantial part of the double charging and over-charging through the tax system. On the other hand, nothing is recovered from the inefficiency of industry which has been shown up here.
I hope that the inquiries will at least explode the myth that profit is a criterion of efficiency. Certainly nobody will deny that there was very substantial profit to Bristol Siddeley, but I hope that hon. Gentlemen opposite will not argue that

the profit proved that the company was efficient, for of course it did nothing of the sort. It proved that it obtained the high profits through double charging and overcharging.
How then should the Government pay industry in complicated contracts of this description where competitive tendering is impossible? I do not like a cost-plus system, neither do I like the system of a fixed percentage of return on capital if, in the end, it amounts to the same thing, which it could do if one held up the fixing of the price until such time as one has the post-costing. In effect, it then becomes a cost-plus price rather than a fixed price.
The best way to get efficiency is through the fixed price system, with its genuine incentive as a goal in order to let the company go ahead to try to make higher profits. I hope we do not allow the new system recommended by the Lang Committee, as reported to the House by the Chief Secretary, to degenerate into a system of cost-plus, which is the most inefficient of systems.
On 26th February, 1968, my right hon. Friend the Chief Secretary said this to the House:
The Government accept the view of the Second Lang Report that fixed prices freely negotiated should in general not be retrospectively modified. The main uses of post-costing would therefore be not to renegotiate prices, but to price follow-on orders, to check the accuracy of cost estimates and to provide necessary cost information. This should improve the quality of estimates and reduce the weight on Government Departments.
That is true, and I hope the Chief Secretary will abide by that. But, if this is not to result in cost-plus, it is vital to get the price agreed in time. That is most important to prevent the built-in incentive to inefficiency that we have had in the past. The genuine fixed price with incentive to beat the 14 per cent. on capital employed is a case in point. Although, in general, I am happy with the statement of the Chief Secretary, he says further down in the same column:
The basic issue will be whether the original price was fair and reasonable…"—[OFFICIAL REPORT, 26th February, 1968; Vol. 759, c. 948.]
We return to these horrible words "fair and reasonable", which are the words in Standard Condition 43.
I hope by this time that it is clear that it is no longer a game, or a stylised game,


that is going to be played. I do not like games of any description being played with taxpayers' money, and this is what has been happening in the past. The Government must make it clear that "fair and reasonable" is fair and reasonable on each contract and not on the whole of the company's business or the whole of the company's business with the Government.
I cannot understand how anyone could interpret "fair and reasonable" as meaning overall in negotiating on a contract basis. It is quite incredible for anyone negotiating on a contract to say, "It does not matter whether it is fair and reasonable, because the important matter is that it has to be over the lot." That is completely idiotic. Surely no one could interpret the words in the way that hon. Gentlemen opposite suggest.
I want finally to refer to one phrase in paragraph 23 of the Wilson Committee's Report with which I disagree. It is rather an important point. The Committee says that the Department was in no position to dictate. That is an odd sort of statement. If that is the case, Ministers and officials of Departments should have a word with the directors of Marks and Spencers and G.U.S. They do not have any manufacturing companies, but get all their supplies from manufacturing companies. I can assure hon. Members that those two highly efficient organisations certainly dictate and put pressure on the firms which supply them with goods. Certainly they would be able to tell the Government how they could dictate in their position as a major buyer.
They should dictate a fixed price along the lines that I have suggested, with equality of information, being careful that the time element is taken into account. If they used their powers on behalf of the taxpayer in that way, great benefit would result not only through bringing efficiency to the companies concerned but bringing great benefit to the nation as a whole.

7.2 p.m.

Mr. Philip Holland: Lacking the natural ebullience of the hon. Member for Heywood and Royton (Mr. Barnett), I should like to present in more moderate terms the other side of the P.A.C. penny by tracing very briefly how I reached the firm conclusions that I

did on all four issues before the Committee and in respect of both witnesses.
As one of the two members of the Public Accounts Committee appointed at the end of last year, I was not involved in the Committee's 1967 examination of Sir Reginald Verdon-Smith and Mr. Brian Davidson. I met them for the first time, if one can call it meeting them under such circumstances, when they walked into the Committee room upstairs on 20th March, for the first sitting of our inquiry. I knew of them only from reading their replies to questions put by the Committee in 1967 and published in its Second Special Report last July.
If I began the 1968 inquiry with any prejudice, it was one borne of their words as they appeared in the earlier Report. To be frank, I entered the Committee room on 20th March with a bias against Mr. Brian Davidson because of what seemed to me to be a difficult to believe ignorance of matters which ought to have been his concern.
As a member of the P.A.C., I regarded it as a duty to ascertain the truth one way or the other to my own satisfaction. I felt, in spite of what has been said, that we were sitting in a quasi-judicial capacity and that, as my right hon. Friend the Member for Reigate (Sir J. Vaughan-Morgan) said, it was in the interests of the Committee, the House, and the two witnesses that we should reach positive conclusions. As a result, when earlier questions did not elicit answers enabling me to make up my mind conclusively, I asked supplementary questions to help me achieve this. I assumed that the other members of the Committee were doing the same, and I believe that they tried to.
My doubts about Mr. Davidson's evidence last year on the first issue—that is, the knowledge of the high profits—were on two counts. The first was that he might deliberately have failed to supplement information given by Sir Reginald, knowing that it was expected of him in those areas where the non-executive chairman's knowledge could not be as detailed as his own. The second was that in his own replies he may have misled the Committee deliberately either by omission or misstatement.
I was satisfied on the first count by Mr. Davidson's replies to my Questions Nos. 205 to 209. It became quite clear that he had been inhibited and that, in his view, he had been there merely to answer questions put to him directly. On the second count, it was not so much Mr. Davidson's replies as the interjection by Sir Reginald Verdon-Smith in answer to my Question No. 217 that reassured me.
This set the matter in context for me and explained how Mr. Davidson could be ignorant of much of what was going on in departments for which he held overall responsibility. It showed clearly his method of working. In effect, he was a troubleshooter, delegating the work and responsibilities of the departments to his subordinates and concerning himself largely with the really difficult technical problems as they arose. In that context, I could accept his ignorance of matters of which he really ought not to have been ignorant. That may not be the way that many hon. Members would work in his position, but if that was the way that he worked, it would explain the ignorance which he professed.
On the issue about the knowledge of double charging, I sought merely to establish the relationship between Mr. Davidson, the commercial manager and the price controller and to ascertain whether any one of the three could have found out about the double charging and, if so, whether the other two were likely to have been informed.
The point was pursued by the hon. Member for Brentford and Chiswick (Mr. Barnes) in Questions Nos. 282 and 283, but it was the replies to Questions Nos. 286 to 309 by the hon. Member for Sheffield, Heeley (Mr. Hooley) and the way in which they were given which finally convinced me that in 1967 both Sir Reginald Verdon-Smith and Mr. Davidson had replied to the best of their knowledge of the point. They convinced me not only because of the words that they used but the way in which they used them and their demeanour at the time. Some of our questions could not be described as friendly, and their reaction to them was exactly what my own would have been had I a clear conscience.
On the third issue about Bristol Siddeley's actions and motives, I had

little doubt that, while the answers given last year could have been given more fully by a more verbose witness, nevertheless they answered the questions put to them in a narrow sense, and the additional information available to the Committee this year would not have affected materially the conclusions reached last year by the Committee. In that sense, there could have been no point in omitting the information in order to mislead the Committee at the earlier inquiry.
My right hon. Friend the Member for Reigate has explained already the difference between these witnesses and the normal run of witness whom the Public Accounts Committee interviews. The Accounting Officer knows that he has a responsibility to try and understand the nub of questions asked of him and to reply in the broadest terms to avoid possible misunderstandings. However, these two witnesses considered themselves to be in almost the equivalent of a court of law, where it is necessary to answer precisely the question which is asked of one, and no more. It may be that difficulty arose last year because the Committee itself did not understand that there would be a different approach by the different type of witness appearing before it.
On the fourth issue I had no doubt that this was due to a genuine misinterpretation of the basis of computation of the figures in Appendix IV of last year's Public Accounts Committee Report. The replies given by Sir Reginald Verdon-Smith to the Chairman's questions Nos. 272 to 283 confirmed my view that there had been no deliberate attempt to mislead. I felt that it was a moot point whether we should have considered the fourth issue anyway as I thought it was fairly cut-and-dried before we started the inquiry.
Any final doubts I may have had on any of the four issues in respect of either witness—I am speaking only of the narrow point of deliberately misleading—would certainly have been dispelled by the replies, and the way in which they were given, to the very penetrating questions put by the hon. Member for Bebington (Mr. Brooks), questions Nos. 414 to 424, which seemed to me to go right to the heart of the matter.
I can find no evidence, nor could I find at the inquiry any evidence, to show


that the witnesses deliberately attempted to mislead the 1967 Committee. I am sorry to add this, but I feel I must. I feel, as the Chairman of this inquiry felt, that it is to be regretted that the 1968 Committee, charged with the task of clearing up the matter one way or the other, proved incapable of reaching a unanimous and firm conclusion on all four counts. Unfortunately, most people will tend to read only the conclusions in the report without attempting to evaluate the evidence for themselves. I believe that the conclusions are misleading, because they are, by and large, a compromise between two widely differing views held in varying degrees by different members of the Committee. I am not criticising particular views held by individual Members, as members of the Committee present will understand. I am criticising the Committee's failure to obtain enough evidence to reach a firm conclusion. I feel that if we did not obtain enough evidence to reach a firm conclusion it was our fault as members of the Committee. Either we asked the wrong questions or we did not ask enough, but the facility was there. I feel we should have found enough evidence to reach a firm conclusion on all four counts.
Membership of the Public Accounts Committee compelled me to look closely at the report of the Wilson Committee. Much has been said about it, and I express the general view that what I read in it has disturbed me greatly. It is alien to our sense of justice in this House for a committee to have the power to accuse without substantiating the charge and to condemn without disclosing any supporting evidence. In my view, this is a serious erosion of the liberty of the subject if pursued. As such it must command the attention of Parliament. In its rôotector of the rights of individuals and small minorities, Parliament should be gravely concerned about the implications of the way this report has turned out. We have a duty to resist any tendency on the part of any organisation, body or the Executive, to confer on any group of individuals, for any purpose whatever, power without responsibility, because this strikes at the very roots of our democracy.

7.14 p.m.

Mr. Charles Mapp: The debate has taken on a welcome change from the first speech that we heard from the Opposition this afternoon. I am glad that the legal stuff that we had has in the main been lost sight of. The House is concerned now with trying to assess credibility and judgment in the business world.
I recognise, as does the Public Accounts Committee, of which I was a member, that the resort of the businessman who travels either near morality or near the law will be to his legal advisers. I want the House to look at this in a balanced frame of mind. I thought that the Minister was reasonably fair in his analysis of the position, but I want to take a long-term view about the work of the Public Accounts Committee. I am not happy with the Minister's assurance that this will not happen again. I will give my reasons later.
We have six questions to answer in our minds The first is whether there has been commercial deception rather than legal deception and, if so, to what extent and what are the appropriate remedies.
The second question concerns the merits of the Wilson Report, taking note of the firm's dispute with many of its decisions.
The third point, to which reference has been made and about which I am worried, is the procedure of the Public Accounts Committee when it is called upon to inquire into a commercial firm's dealings with a Government Department in regard to the expenditure of public money. I believe that we have to find a procedure separate from the questioning of civil servants and so on.
Fourthly, we have to ask ourselves whether the present difficulty before the House has happened before and, if so, what are the right lessons to be learned from it.
Fifthly, we have to ask ourselves whether a monopoly customer—in this case the Government—in the hands of a monopoly supplier—in this case the firm—can equate a fair commercial profit. My submission is that it is completely incompatible to try to do so.
Sixthly, we have to ask ourselves whether the public interest is necessarily in conflict with private interest where those two monopolies are operating and, if so, what should be done about it.
First, the issue of commercial deception. The Wilson Committee is quite clear and, though much of the evidence is not published, its general conclusions 1 and 2 on page 101 are unmistakable. The House must surely respect the words of three eminent independent people who, after careful analysis and with all the implications, talk about "intentional misrepresentation". Surely in this context that is commercial deception. In my judgment, therefore, commercial deception is well established in the Wilson Report.
It may be said that the evidence supporting the conclusion is not available, but the proceedings of the Public Accounts Committee are available. That body spent considerable time on this issue of credibility in relation to the four issues which were before us at our last major sitting. I was concerned—I have some experience of the courts, not as a lawyer but as a magistrate—to try to establish fact and, in so doing, dissociating from my mind any prejudices I might have. As I say, I was concerned to try to establish fact and, in areas of doubt, having heard the witnesses fully and adequately, to assess their credibility.
In one major respect the credibility of one witness was doubtful, and that of the other more than doubtful. It became clear that the firm's management structure in relation to the board's responsibility for dealing with problems, was intended either to remove major decision-making authority from the board, or—and this is more likely—to enable the board to rubber stamp decisions made by executive officers.
After carefully studying the facts and listening to the witnesses I came to the conclusion that the chairman was able to demonstrate, by way of records, that he did not necessarily know the profitability rate during all those years. We were not able to establish beyond doubt that he knew. He knew in general terms, though we were unable to procure records to that effect. There is no doubt that he had a responsibility to know. As I say, he probably did know, but there

was no direct evidence about that, and I therefore felt that, as they find in Scotland, the case was not proven.
Mr. Davidson had a direct responsibility in the matter. He admitted, in effect, that he was aware that he should have known what was happening. The information was submitted to him, and his explanation to the Committee was a remarkable demonstration of what he called management by exception, and perhaps I might digress for a moment or two to discuss that.
I am sure that most hon. Members have held executive positions at some time or other. Mr. Davidson gave us a picture of a desk near him in his room, on which there were up to about 80 sets of papers. Nearly all the matters set out in those papers were going right. They were presenting no problem, and his idea of management by exception was to concentrate his attention on those problems which were going wrong.
I think that we can all have some sympathy with that view. I think that we all have personal experience of it, but we cannot persuade a canny businessman that that is so. If, at the start of the working day, having spent say an hour and a half reflecting on what needs to be done, one comes to the conclusion that 90 per cent. of the problems are going the right way, it does not mean that one does not know the outturn and profitability of the company. Being a businessman, one is happy to know that it is there, but clearly one has a responsibility to pay serious attention to the problems that are going wrong.
Mr. Davidson told the Public Accounts Committee about the method which he adopted and I was sorry that Sir Reginald supported him. It means that I am asked to believe either that Mr. Davidson was extremely naive, or that I was being misinformed. Very often what one is not told is as important as what one is told, and I believe that this was a classic case of the P.A.C. being misled.
I would have liked the P.A.C. to have been able to register a general feeling that in terms of culpability Sir Reginald might have been exonerated from a good deal of intention to mislead. There was, I think, a measure of it, and I leave it there. With regard to Mr. Davidson, however, it is clear beyond peradventure that he knew all about it, and there was,


I will not say a conspiracy, but an intention at least to condone what was happening at his level, and also at lower levels. It is probably fair to say that the attitude was condoned in the board room.
Having met the witnesses, one feels a certain amount of regret at what the decision announced by my right hon. Friend means for them in their public life. But public life has its penalties.
With regard to the examination of private firms doing business with the Government, it is clear that the introduction of counsel for the two main witnesses changed the character of our inquiry. It was known that the firm was involved in domestic problems which would perhaps result in court proceedings. It was clear that the introduction of counsel was not necessarily to find the truth, but to avoid the consequences. If, in such circumstances, the P.A.C. decides in future that if counsel appear for firms, or their appropriate officers, when questions are to be asked it would not be wrong for the P.A.C. to have counsel to perform a similar function on its behalf, the result could be far more damaging to firms than what is now before the House.
On balance it may be thought that we can leave the legal side of these matters to the courts. That is their job. It is not the job of this House necessarily to judge business relationships but in this context it is to take account of what happens in the ordinary commercial world.
We know that this kind of scandal has occurred before, involving firms which have been technically efficient, but which have used commercial ethics which have been found to be in conflict with the interests of the Government as a customer. I think that it is extremely difficult to equate ethics which are acceptable in commercial business with those which are acceptable in public business.
It was the Ferranti affair, and the consequential Lang Report, which confronted Mr. Davidson with double standards. It was at that point that he realised, and acquainted his colleagues with, the double standards involved in the contract conditions. Although the Treasury has recently announced changes in contract procedure to ensure full disclosure, I think that the result has been merely to define more accurately the inherent incompatible interests of the two parties—the

Government and a firm—within the present arrangements.
That leads me to consider whether when a monopoly customer—in this case the Government—is in the hands of a monopoly supplier—in this case this firm—we can continue to regard reasonable profit as the key criterion. Whether we are acting for a firm or for the Government, we could, and would, be honourable men, but in our hearts we would know that there was a conflict about what was fair and reasonable. I think that we in this House will neglect the issue unless we consider longer-term remedies. It is an impossible task to set either a firm or a civil servant, and in recognising that inevitable conflict I go on to look for the answer. In my view we should take advantage of what big business does.
Everyone is familiar with big firms which manufacture some utility or other relying for their raw material on smaller firms. This happens regularly and we know the inevitable consequences. The major firm takes over the smaller supplier arguing that it is to ensure regular supply and often to ensure a price that can be arranged. And if they do not do that, they certainly exchange boardroom directorships in order that the regularity of supply and price may continue. Is there not in this practice of big private interests a lesson which we can apply? I do not want to introduce an argument about nationalisation. I believe that what perhaps damages so much of our usefulness is getting bogged down in dogma.
I take the view that as regards the two firms I have mentioned—with one of which I am very familiar because it is in my part of the country—a merger should be arranged on the basis of purely commercial arguments just as happens in business. These firms which are on the periphery of science, taking great risks, possibly suffering great losses, possibly gaining great advantages, are ideal for a merger or marriage with the Government. I have no reason to believe that if it were put the right way, subject to one condition, firms in this field would resent it. I take the view that the Government could talk in terms of 50 per cent. of equities with these firms on the understanding that commercial judgment would remain with the board. That is a must.
The Government are unable to exercise that kind of judgment, which firms of this sort exercise in the normal course of business, but there is no reason at all why the Government should not share the risks of loss or gain in respect of these essential firms which we are bound to have within our economy. And this is a simple way of doing it. Putting two boffins, two scientific people into the board room and perhaps adding further knowledge there. Putting two accountant-minded directors into the board room. It is in this particular way that our problems could perhaps be solved. Why should not two such accountant directors be able to streamline, to make a common accountancy process, within this sort of firm which would be acceptable to the Auditor-General, would cut out so much of the double accounting that is going on and would do away with so much of the doubt, the checking and the counterchecking the story of which we have been reading in these reports.
This would, in my opinion, do two things. It would dispose of the kind of argument that we have been having today. I am not opposed to private enterprise at all. These discussions damage important firms. They damage governments too. Neither of these things is desirable in a country in which, over a long period of time, democracy has been good and in respect of firms of whose efficiency generally, with certain exceptions, one can be proud. We can thus take this subject out of the area of dogmatic argument and talk sensibly as in the large boardrooms about having a merger, a marriage—call it what you will—in which the State takes half the risk. In the background, there is the research expenditure of the State and all that sort of thing, and in the long run we in this House who are concerned with the expenditure of money can feel there is a common set of accounts and of criteria. I believe firms, industry and we as a House would benefit from the adoption of such a proposal.

7.35 p.m.

Mr. Eric Lubbock: The hon. Member for Oldham, East (Mr. Mapp) has made an interesting proposal as to how excessive profits can be prevented from getting into the hands of private interests by the Government

having an interest in the equity of the various firms concerned, but he might like to bear in mind the fact that the Government already take 42½ per cent. of the profits of every company in this country in the form of Corporation Tax. So in this respect the hon. Gentleman's demand has already been fulfilled.
I think there are other solutions to this problem of excess profits to which it would be good for the House to give some attention instead of merely raking over the ashes in this debate of what has happened in the successive Reports of the Public Accounts Committee and the Wilson Committee that we are considering this afternoon. I know that the debate is concerned with those Reports and obviously we must refer to them, but if we merely come to a decision on the Motions in front of us in the House and do not suggest any improvements in the system which can prevent the same thing happening again, we are not doing our job properly. I will come back to that in a few moments.
First, I should like to deal with a point which has been made by one or two hon. Members—that perhaps the Public Accounts Committee's method of investigation was defective in this particular instance. I agree with the hon. Gentleman that perhaps having counsel to appear before the Public Accounts Committee on behalf of the witnesses was an undesirable innovation because, to the outsider, it makes it rather like a court room and one has the impression that the witnesses are being charged with some offences, which was not the case, of course, as the Chairman of the Committee was at pains to emphasise. I know that it was the choice of the witnesses that they should be represented by counsel, but I feel that they made a mistake in requesting the Committee to hear them in this manner and I think that, as the hon. Gentleman also said, on future occasions the Public Accounts Committee ought to consider this more thoroughly.
The other point I want to deal with in the Public Accounts Committee's method of investigation is that, as has been pointed out also, it took evidence from only two members of the Board—the Chairman and Mr. Davidson. These two directors have now been pilloried and their reputations have been


very severely damaged. I think that was inevitable in view of the facts revealed by the Wilson Report, but is it quite fair only to level the blame at them and not to consider the rest of their colleagues on the Board, who must have been equally culpable?
The Economist, in fact, put it in an article on 2nd March this year that other very respected figures in the aircraft industry were concerned, such as
Sir Arnold Hall, who was managing director for much of the period, Air Chief Marshal Sir Alec Coryton who had a long and illustrious career in the Ministry of Supply before he helped set up the Bristol Aeroplane Company's engine plant, and was Bristol Siddeley's deputy chairman until 1965; and so on, and so on.
I cannot help feeling a bit unhappy that the whole of the blame has been levelled at those two gentlemen, culpable as they may have been in some respects, as the Public Accounts Committee has demonstrated—not culpable because they wilfully misled the Public Accounts Committee: I have studied the evidence of these witnesses very carefully and, so far as I have been able to form a judgment, the majority were correct and they did not seek wilfully to mislead the Public Accounts Committee last year. But I think that they withheld much evidence that would have been useful to the Committee in their investigation and that they were prevaricating rather in some of the answers they gave.
I am not saying that this was deliberate; I am sure that there is not enough evidence on which to form a definite opinion on this matter, and I think it would be wholly wrong for accusations of that kind to be bandied across the Floor of the House where, after all, neither Sir Reginald nor Mr. Davidson are present or able to make a reply. All we can do is to examine the evidence of the Wilson Committee and the Report of the Public Accounts Committee and form our conclusions on this matter.
I think it is absolutely clear that the House must begin by condemning the vastly excessive profits which were made by Bristol Siddeley over those years, as indeed the hon. Gentleman the Member for Gloucestershire, South (Mr. Corfield) did in his opening speech, even if subsequently a lot of what he had to say

appeared to be in exoneration of the company's policy of that time.
Before going on to the overcharging and the extent of the knowledge of it in the company in more detail, I would like to deal with one point of the hon. Member for Heywood and Royton (Mr. Barnett). He said, referring to a paragraph in the Wilson Report, that perhaps the Government had greater power to dictate to industry than Sir Roy thought and that, in view of the Government's enormous purchasing power, they could have exerted a stronger leverage and could have clawed back a larger proportion of the overpayment than they did.
But it is quite wrong for us here to talk of dictating to industry. What is required, and what has unfortunately been damaged by this episode, is a better partnership between Government and industry. I know that the hon. Gentleman was only quoting from the Report and that that was the word which Sir Roy used, but if language of this kind is used in the House it can only further exacerbate the already poor relations between Government and industry and set back the achievement of the partnership which we would all like to see. So I hope that we will not speak of dictating but more of reaching sensible agreements which will prevent this kind of thing in future.

Mr. Sheldon: I agree very much with what the hon. Gentleman says about a partnership, but would he deny the right of Government to act in the normal buyer-seller relationship where the buyer normally has more advantages?

Mr. Lubbock: Certainly not; this is an extremely important rôle of Government. In the aircraft and aero engine field, the Post Office and many other enormous and important areas of purchasing, the Government have a power to ensure that correct decisions are made in industry, but I suggest to the hon. Gentleman that this comes about not by dictation but by agreement between the Government as customers, either themselves or through the Services or the nationalised industries, and the suppliers of equipment.
It is only a matter of semantics which divides the hon. Gentleman and me. I say that we can arrive at a sensible agreement which can be operated by the Government and industry in partnership and that this should be the whole objective


rather than purely raking over what has happened in this instance. Certainly we should not imply that, because a very serious instance of over-charging has occurred over these engines—and double charging, indeed, on certain assemblies, which I consider even more serious—this is necessarily typical of the relationship between Government and industry. It certainly is not in the aero-engine industry.
I am pleased that the Minister said that there was no question of Rolls Royce having been involved. The fact that that company is now the owner of Bristol Siddeley is in itself a sufficient safeguard against such an occurrence in future. We know that the directors of Rolls Royce are men of the highest integrity who have very good relationships with the Ministry of Technology and would not allow this to happen or to continue for so long without themselves bringing it to the Government's attention.
I know that, in the case of the Bristol Siddeley overcharging, it was the company ultimately which brought the matter to the Minister's attention, but the question which the Wilson Committee considered was how long this knowledge had existed in the company before the disclosure to the Minister. It was a very long time, if one can believe the Wilson Report.
I would not draw such a sharp distinction between the board and the executive committee as some have done. Perhaps Sir Reginald and Mr. Davidson tended to do this rather too sharply. One would expect some distinction between the executive committee on the one hand and the non-executive directors on the other—that is fair enough—but it is wholly unrealistic to say that eight of these people wore certain hats on the executive committee and received information which is admitted, and yet, when they walked across to the boardroom, they were not receiving the same information as board members and therefore had no knowledge of it in that capacity. With respect to Mr. Davidson, this is rather a spurious distinction.
He said that the executive committee, which included all the executive directors, could have ascertained the level of profits on these engine overhaul contracts if they had studied the special reports of June, 1960, and September, 1961, and he

maintained that he was so busy then that he could not remember whether he had seen the reports and added that, if he had, he had never taken in their contents. He thought it even less likely that his colleagues on the executive committee had absorbed that information, because they did not have the same direct responsibility for Ministry business as he had as the member particularly charged with that task. The Public Accounts Committee accepted this explanation, although it said that the evidence
…paints a picture of negligence and irresponsibility in the conduct of the Company's financial administration which Your Committee found hard to credit in a Company of this standing…".
This brings me to the Minister's announcement today that he has asked Sir Reginald and Mr. Davidson to relinquish the offices which they hold at the Government's appointment. As I understand it, he is not disagreeing with the Public Accounts Committee that they did not wilfully mislead that Committee last year, but is merely saying that, in view of this very grave charge levelled at them by the whole of the Public Accounts Committee—that they were guilty of negligence and irresponsibility, which is a serious thing to say of anyone—although they are not being accused of dishonesty, he can no longer have sufficient confidence in them for them to remain in those public offices.
In that light, the Minister is surely entitled to this decision and I hope that he is not going against the Committee by maintaining that these two men have been dishonest—

Mr. Benn: The hon. Member's remarks enable me to confirm his impression, namely, that, in reaching this decision, the Government are not giving a decision one way or another about the findings of any one of the three Committees, but saying that, in all the circumstances, they do not feel that they can repose confidence in these two people for public appointments. That is the sole reason for the Government's decision.

Mr. Lubbock: I think that that is legitimate, and I am grateful to the Minister for confirming my understanding of the motives behind his announcement.
It is difficult for us, and I suppose that it must have been difficult for the Public


Accounts Committee because it did not have all the evidence which was presented to the Wilson Committee, if I am correctly informed. I suppose that they could have asked for it, although there are many statements made here which are not confirmed; it would have been of material importance in deciding this question of the extent of knowledge.
To take two examples, paragraph 73 says:
We also think it right to say that we are satisfied that at one stage, in 1961, the Commercial Manager (Ministry) was uneasy about the level of profits which would result from his forthcoming negotiations with the Department, and that he mentioned the matter informally to the Chief Accountant, who in turn mentioned it informally to the Managing Director…".
There is no point in pursuing this, because the managing director was never called to give evidence, but, presumably, if it was mentioned to him, he would have laid that information before the executive committee and, therefore, at some stage the other members of the executive committee would have known of this level of profits communicated to them up through the chief accountant.
Of course, they may not have taken it in. As Mr. Davidson said all along, the fact that information was available to the executive committee did not mean that they had taken it on board and had necessarily registered the fact that this was an outrageous level of profits on a contract like this, in which there was no risk whatever. In nearly every case, these engines had been coming to the repair shops for some time and the learning curve had already given them substantial confidence in the ability of their shops to carry out those repairs within the estimates.
Paragraph 80, to which I referred in an intervention when the hon. Member for Gloucestershire, South was speaking, states:
When this Report was considered by the Executive Committee at their June 1960 meeting they noted that Viper overhaul was less profitable than might have been expected, and it was explained that the quantities being put through the shops were not yet sufficiently great for a normal level of profitability to be achieved. It was recommended hat the report be further studied by those concerned and reconsidered at a later date. When it was reconsidered at the Executive Committee's September 1960 meeting the

profitability on engine repair work was considered 'adequate'.
Presumably the figures—the Hercules at 35·5 per cent. and the Sapphire 6 at 78·8 per cent.—were known to the Executive Committee and no doubt the members said, "Here we have the Viper at only 44·8 per cent., and that profit is too small." When the figures were brought back to the next meeting the figures had improved—indeed, they had improved to such an extent that the executive committee described them as "good". By September, 1961, that level of profit on the Viper had risen from "good" to 135·2 per cent., so that there had been a substantial improvement indeed during that period.
If I were a manager in that position, having said that the level of profit on the first occasion was inadequate, I would at least have had a look at the later figures, in the next report, to see what level of profit had been reached. I would then have known that it was 135·2 per cent. I do not think that we are in a position to say—we cannot say unless we have access to all the evidence that Sir Roy Wilson studied, as well as that available to the P.A.C.—whether or not there was knowledge to the extent that it had registered with the members of the executive committee and that they were guilty of criminal action in not revealing the matter to the Government. That would be unjustifiable, despite the findings of the Wilson Committee. The most that we can say is, like that P.A.C., that these men were negligent; and therefore the Minister has taken the correct action in depriving them of their public offices.
Nevertheless, it still seems a little unfair that Mr. Davidson and Sir Reginald should have been singled out. Mr. Davidson came into it rather by accident because it was Sir Reginald who decided to invite him to accompany him when giving evidence before the P.A.C. It seems unfair that these two men have lost their reputations while the rest of their colleagues have gone unscathed.
I said that we should not rake over the ashes. To do so would not be productive. I urge the Minister to answer some questions which need answering in view of the P.A.C. Report and the findings of the Wilson Committee. First, are we now satisfied that the Technical


Cost Department will not in future fall below an acceptable level of competence? We have had the Ferranti case and now this one, and in both of them the Technical Cost Department was involved. I have no doubt that the Minister will say that the Department has been improved.

Mr. Benn: I must comment that they were simultaneous cases. Although they came to light at different times, they both occurred at about the same time, as the hon. Gentleman knows.

Mr. Lubbock: I agree. It is a question of the difference in the timing of the Reports. I suggest that it would be worth the right hon. Gentleman spending a little time speaking about the measures which the Government have taken to improve the level of competence of the Technical Cost Department. I was somewhat dismayed when the right hon. Gentleman spoke on this subject earlier, because he referred to an increase in the number of people employed in the Department. I do not believe that that is the answer. I remember being astonished at the level of remuneration paid to the officers of the Technical Cost Department at the time of the Ferranti debates. The lowest salary was about £750. It is impossible for that sort of money to attract the type of men we want in this Department—and that salary was being offered before the inflation which has occurred more recently. For salaries of that kind we cannot expect to attract the sort of men who are capable of driving a hard bargain with an aero-engine firm or any other supplier of military equipment.
What upgrading has taken place in the training and capabilities of the officers of the Technical Cost Department? How many professional engineers are employed in the Department? I recall that only three or four such engineers were employed at the time of the Ferranti affair. I trust that things have improved since then. Now that we have equality of information, the trend of employing more people in a Department such as this should be reversed. Fewer people should be employed and I would welcome assurances from the Minister that now that this excellent agreement has been reached with industry, steps will be taken forthwith to reduce the number employed and transfer those not needed to other work.
The right hon. Gentleman might also spend a little time dealing with the question whether the target level of profit is adequate, even after the increase which the right hon. Gentleman mentioned and which, I understand, has been discussed with the C.B.I. We are now considering a figure of 14 per cent. on capital employed, which is equivalent to only 8·4 per cent. after Corporation Tax. I agreed with at least one point in the speech of the hon. Member for Gloucester, South: that if one pitches profit levels as such a low figure as 6 per cent. to 8 per cent.—the sort of figure available in the days of the Bristol Siddeley engine contracts—one is placing a great temptation on industry to cheat. Even at a level of 14 per cent.—taking into account Corporation Tax, which we have now but which we did not have then—one is asking for trouble. I beg the right hon. Gentleman to reconsider this profit figure, in conjunction with the C.B.I. and industry, to see whether it should be further raised.
I return to my first point; the need for Government and industry to work more closely together. This is the crux of the problem. I do not support the solution advocated by the hon. Member for Oldham, East, because the problem can be tackled in another way. If the Government have the utmost confidence, as I am sure they have, in the experience and trustworthiness of Rolls Royce, which now owns Bristol Siddeley, there can be less policing of contracts by low-level personnel. The tighter control mentioned by the hon. Member for Coventry, North (Mr. Edelman) is not needed.
The more trust that can exist between managers at all levels—between the negotiating staff of the various firms and those who deal with these matters for the Ministry of Technology—the better will be the climate in industry, with the result that this may be the last of this type of scandal that we shall experience. It is distressing and unpalatable for the House to discuss matters such as this, but it is necessary for us to probe them, as the P.A.C. has done. I sincerely hope that this is the last debate of its kind that will ever take place.

8.0 p.m.

Mr. Edwin Brooks: I am sure that hon. Members on both sides will share at least the concluding sentiments expressed by the hon. Member for


Orpington (Mr. Lubbock). Those of us who served on the Public Accounts Committee both this year and last year have already had ample opportunity, both individually and collectively, to express our views on many of the matters now before the House, and I shall seek to detain the House only briefly.
In summary, the work of the Committee was to produce in 1967 a trenchant criticism of the company and, indeed, of the Ministry. Nothing that has been revealed since in Wilson—nor, indeed, in our subsequent investigation on the Committee—has in any way diminished the force of those criticisms. On the contrary, as has been made amply clear, as the picture has been filled in it has become increasingly to look a little like the portrait of Dorian Gray. The deeper the post mortems have probed, the more curious and, to many of us, extraordinary, has been the evidence of what I would call promiscous profiteering. Furthermore, the promiscuity was not furtive and secret, nor hidden from the innocent eyes of the executive committee.
Two successive special reports on engine overhaul contracts, which were submitted, as we now know, to B.S.E. in 1960 and 1961, showed the profit on Viper, one of the engine assemblies, rising, as the hon. Member for Orpington has made clear, from a not inconsiderable 44·8 per cent. to 135·2 per cent, or, in the executive committee's imperishable understatement, from "adequate" to "good". A Viper has been hitherto known as an Adder. At the very least we shall call it in future a multiplier or a digital computer.
I do not intervene in the debate to go over the familiar ground or to recapitulate the disapproval which all members of the Committee in 1967 have already expressed about B.S.E.'s quite disingenuous attempts, repeated in recent days, to justify its interpretation of Standard Condition 43. This unanimous disapproval is on the record and is absolutely clear and unequivocal. It is clear beyond a peradventure that the company's behaviour was all the more reprehensible in view of the nature of the contracts. Super profits might be justifiable in terms of trail-blazing enterprise and ingenuity, but these were routine contracts for overhaul and repair. If, in such circumstances, super profits are to be the reward for

dimly disguised sophistory, the train robbers were unjustly prosecuted. At least they robbed the rich. If these are to be the ethics of business, the Government must delay no longer in cleaning up the jungle.
At least we have now established the principle of equality of information. I suppose we might call it the defoliation of the capitalist jungle—and about time, too. This, together with post-costing, are the welcome developments which this otherwise uniformly depressing affair has encouraged. But there are other aspects of this scandal, so perceptively foreseen by Mr. Davidson as likely to prove a scandal of the greatest magnitude, which leave me dissatisfied and even alarmed.
To put it simply—I am bound to say this for the record tonight—I regard the Wilson Committee's procedures, its analysis of evidence, and at least some of its conclusions, with considerable misgivings. I do not see this evening's debate as necessarily leading to two alternative conclusions. To criticise certain aspects of Wilson, as I shall do later, is not in any way to exonerate B.S.E., certainly not from those very serious charges which were considered and stated unanimously by the P.A.C. in 1967. I have no reservations whatsoever about those strictures.
However, it does not necessarily follow that, because we attribute considerable blameworthiness to Bristol Siddeley, we must necessarily accept that everything about the Wilson Committee's Report is beyond criticism. When the setting-up of the Wilson Committee was announced to the House a year ago this week, I asked the Minister of Technology
whether the evidence, whether oral or in writing, which is submitted to the Committee, will be published in full.
My right hon. Friend replied:
The report will be published, but I think that one must be guided by the Committee itself and that it should decide its own procedure."—[OFFICIAL REPORT, 24th April, 1967; Vol. 745, c. 1164.]
In retrospect, I think that to allow the Committee such discretion was a mistake. However, the Committee explains in paragraph 9 of its Report that it speedily decided—this seemed reasonable at the time—that it
could not do better than follow the procedure which the Lang Committee had adopted in the Ferranti case".


With some aspects of this procedure I have no quarrel. I am sure that none of us has. Clearly, access to all relevant documents was absolutely necessary.
However, I see dangers—I think that the dangers have now become apparent—in deciding against keeping a verbatim record of the evidence and against publishing the evidence of witnesses or disclosing it to their colleagues, some of whom were possibly to come under accusation during the inquiry. Evidence which is given on these terms, incapable of precise subsequent reference, unknown to those against whom such damaging accusations were being made, is surely suspect evidence. I do not wish in any way to disparage the distinguished members of the Wilson Committee who, only too obviously, had a difficult and disagreeable job to do, but I must express regret that Parliament has no means of checking the evidence which led the Committee to make serious allegations, not just of business incompetence, but of commercial chicanery.
I am equally unhappy that we are now besought to approve those conclusions this evening, some of which have already been modified by admitted inaccuracies in those original conclusions which it was announced the Government were accepting when my right hon. Friend made his statement.
What rules of evidence applied during the Wilson hearing? Accepting, as now seems possible—indeed, likely—that there was some skulduggery among some of the firm's employees, it is not beyond the bounds of possibility that those who might have been guilty of certain improriety would have sought to implicate others as a sort of smokescreen and shelter. For such witnesses to be able to say just what they chose, knowing full well that their evidence would never see the light of day, is to run the risk of slandering honourable men.
Further, to obtain evidence on such terms, terms of confidentiality and secrecy, might complicate any subsequent criminal prosecution arising out of the Committee's work. This problem is not merely theoretical. It is a point that the hon. Member for Orpington touched upon. Those of us on the Public Accounts Committee were to discover, in

our efforts to reconcile an apparent conflict of evidence and conclusions, that there were certain difficulties in obtaining access to the files of the Wilson Committee. I personally felt, and I expressed this point of view on the Committee, that such opportunity to see the evidence on which Wilson had made his very serious allegations might be necessary for the Public Accounts Committee.
But could the Public Accounts Committee, in the circumstances of the Wilson Committee's inquiry, have properly used its very formidable powers to send for persons and papers—persons who had volunteered information to Wilson only on the understanding that it would go no further? If the P.A.C. faced, as it did, such a dilemma, would not the courts equally have found their work hindered? This point was touched upon in an Answer given by my right hon. Friend in a supplementary Answer to the hon. Member for Orpington dealing with a possible civil action following the Ministerial statement of 28th February last. In other words, a quasi-judicial inquiry or tribunal—in this case a committee of inquiry—seems to be preempting a subsequent judicial inquiry.
These, then, are some of the general doubts I have about a procedure—in a way, this is nothing to do with Bristol-Siddeley any longer, this could apply to any institution or body: a great trade union, for example—which it seems to me is contrary to certain well-tried principles of English law.
The contrast with the proceedings on the P.A.C. is clear. In that Committee, evidence is taken and published verbatim. Sidelining is permitted only in exceptional circumstances, and at the discretion of the Committee alone, such as when considerations of national security arise. I do not wish to sound complacent about the P.A.C., particularly when, as in this very unusual case, it was called upon to investigate a commercial firm rather than a Government Department. I share many of the misgivings expressed earlier by my hon. Friend the Member for Heywood and Royton (Mr. arnett). Parliament must beware of Government-sponsored Committees, armed with quasi-judicial powers and capable of making the most serious and damaging allegations against individual


citizens, using methods of inquiry which might even be reminiscent of the Court of Star Chamber. According to Chambers' Encyclopedia which, I suppose, is the obvious fount of wisdom in this House, the Star Chamber is described as having been
during the Tudor age of undoubted utility as a means of bringing to justice great and powerful offenders who would otherwise have had it in their power to set the law at defiance.
Perhaps this is the rationale of the Wilson inquiry. But, if so, it is a confession of weakness for those responsible for strengthening the law and a disturbing symptom of reliance on extra-judicial inquiry and inspection. Further, it is worth looking closely at the Committee's evidence and the Government's acceptance of its conclusions, for this is where the quasi-judicial seems to become, if I may so put it, the queasy-judicial.
In paragraph 232, the Wilson Committee gives its general conclusions. These have already been referred to in the debate, but the matter needs to be spelled out. I refer, in particular, to the conclusion relating to double charging, which I regard as far and away the most serious of all the charges in the Wilson conclusions. It is a charge of deliberate and wilful connivance at something which was utterly wrong and which, I should have thought, gave opportunity for criminal prosecution. The Committee states:
The fact that in relation to a number of sub-assemblies there was double charging at Coventry as between the overhaul contracts and the repair of spares contracts was known to B.S.E.'s estimating staff from about the dates when in each case it first occurred, and to certain of their superiors at later dates.
There is no qualification whatsoever. The double charging was known to these various people. But in paragraph 154 we find a most important qualification on precisely this point:
In the result we have reluctantly come to the conclusion—although the matter cannot be regarded as entirely free from doubt—that B.S.E.'s estimating staff were aware"—
and so on. According to Wilson then, the matter could not be regarded as entirely free from doubt. Moreover, this uncertainty remains even after the most thorough investigation of all the financial documents and information which, it is admitted, were willingly supplied by the

company. In paragraph 9 the Committee states:
We are satisfied that nothing has been withheld from us".
Therefore, if doubt remains, as it did and does, it is inherent in the nature of the evidence such as is now available and not inherent in or due to any prevarication by B.S.E. Such a qualification, particularly in these circumstances, with Wilson having had the run of the firm's men and materials, is extremely important. A judge faced with such doubts would surely have to advise the jury to find the case not proven, or would certainly have to put to the jury this aspect of the prosecution's case.
Yet Wilson not only comes down against the principle that a man is innocent until proved guilty but makes no reference to the qualification on the conclusion in the summary—and let us remember that it is the concluding summary which is all too often the only part read by the Press and others. I regard this as reprehensible.
If the conclusion is accepted as accurate, I see no basis whatever for not proceeding to prosecution. If there was connivance and wilful deceit, and if there is no qualification in that conclusion, there is an obligation to the people accused to be given an opportunity to defend themselves in a court of law. I feel that it is absolutely wrong to use this type of inquiry as a means of pillorying people who are in no position to answer back in any way. I cannot think that the House of Commons could regard this as satisfactory.
I shall not detain the House long, but I wish to give my approach to the second inquiry by the Public Accounts Committee. I was at times on the side of the minority, and I should like to explain the principal which seemed to me to operate. It is not an exceptional principle in our judicial system. It seemed to me that, unless we had evidence to establish that Sir Reginald or Mr. Davidson was wilfully misleading the Public Accounts Committee last summer—this is nothing to do with what B.S.E. had done in 1960 or subsequent years—then, without such evidence, we surely had to acquit them on such a charge. I made this view clear in one or two of the questions which I put.
I always found it difficult to believe that either man would be so unutterably


foolish, let alone dishonourable, as to seek to mislead the Public Accounts Committee in any significant or deliberate sense, knowing that Wilson was probing simultaneously into every nook and cranny of the company. I felt that one needed very definite and objective evidence before coming out with a verdict of guilty, or, indeed, a verdict which failed to exonerate both witnesses on a grave charge. I did not find such evidence, and I am bound to say that I do not regard it as sufficient to rely upon impressions. I voted accordingly.
I have had no second thoughts since, but I wish to make clear that the price of giving the witnesses the benefit of the doubt which might otherwise have accumulated over their reliability and integrity was to stress the original findings of the P.A.C. last summer, which expressed a very clear view—I hope that the hon. Members will read what was said then—about the business efficiency and procedures of the company at senior level. There is the fact, for example, which has not been mentioned today, that the board as such—the hon. Member for Gloucestershire, South (Mr. Corfield) in his long dissertation about the way in which the board worked never made this point—was never asked or even told about the decision to submit revised quotations and thereby to reveal the size of the earlier profits.
All this leaves me with a sense of sheer wonder about the processes of consultation and decision-making among the senior management of the company. Further, there is the question of alleged inefficiency. We should remember that inefficiency was by no means confined to the firm. It was 50 per cent. of one and half of the other, I suspect. But to allege inefficiency is not to allege that Sir Reginald or Mr. Davidson sought deliberately to mislead Parliament last year.
Scandals always produce an excess of self-righteousness, and there is a danger of fastening upon scapegoats. Although I understand the background, I find it unfortunate and rather sad that the Government have found it necessary to announce their decision today about Sir Reginald and Mr. Davidson. But perhaps the time has come when we should

be less indignant about those conveniently close at hand and in full public view.
Despite the apparent gravity of the Wilson conclusions—I have no doubt that they are grave—the Government have not prosecuted anyone. If the behaviour of the company has been within the law, then it is wrong—I am back again to the general principle—to use extra-judicial tribunals to pillory a firm in this House, particularly when there is no opportunity to answer back, or to hold Members accountable for their words in the courts. If, on the other hand, the firm has been without the law, the Government should have no hesitation in prosecuting at once. My own view is that they should have prosecuted.
I hope that by saying that I am leaving no doubt whatever about my interpretation of the gravity of the Wilson Committee's conclusions. But, with respect, I put it to the Government that they cannot have their cake and eat it without discrediting the distinction between the political executive and the judiciary.
I suppose that Bristol Siddeley will pass into the mythology of party politics, and the great deal it tells us about business morality will not be forgotten in a hurry. But we also must be the guardian of political morality rooted, as it is, in the rule of law. It is this aspect which Parliament forgets at its peril, and for these reasons I shall not be able to support the Government in the Lobby tonight.

8.18 p.m.

Sir David Renton: The hon. Member for Bebington (Mr. Brooks) has made a powerful speech. I think it most regrettable that the Chief Secretary, who, I understand, is to wind up, did not hear it, and neither did the Attorney-General hear what the hon. Gentleman had to say about natural justice, in words which I myself envied. I am grateful to him because what he had to say enables me to keep my speech shorter than it might otherwise have been. I saw no one on the Front Bench taking a note of what the hon. Gentleman said for whoever is to wind up. The Minister—I do not blame him; I have done it myself—had his eyes shut throughout most of the speech, and, so far as I could see, took no note except towards the very end.

The Minister of State, Ministry of Technology (Mr. John Stonehouse): I assure the right hon. and learned Gentleman that a very full note of my hon. Friend's speech will be prepared for the Chief Secretary before he comes to wind up.

Sir D. Renton: I am glad to hear that, because it was, if I may say so, one of the most important contributions to this debate.
First, I take up one point about the Public Accounts Committee, which has a bearing on the Wilson Committee as well. If the hon. Member for Bebington wishes to intervene, I shall willingly give way. In reading the Report of the Public Accounts Committee, I thought to myself how frightful it would have been in 1968 to be questioned before the Committee about something which I had done in 1964, in whatever capacity, and how very much worse it would have been to be questioned about what other people did in 1960 and 1961. We must bear in mind, as part of the scrutiny we should rightly make of the procedure of the P.A.C., that we perhaps impose an impossible memory test on some of the witnesses called before us.
That has a bearing on the position both of Sir Reginald Verdon-Smith and Mr. Davidson in this matter. As one of the reasons for the rough treatment which Sir Reginald and Mr. Davidson are now being given by the Government, treatment which I consider vindictive and unjustified, the Minister said that as witnesses they used words capable of more than one meaning. If that is to become a reason, or a contributory reason, for going out of public life, one wonders how the Prime Minister stands.
When the Minister announced on 28th February that he accepted the Wilson Committee's findings, including the most serious allegations involving the honour of individuals, I instinctively felt that he had jumped too quickly and easily to the wrong conclusions about the Committee's Report. Then I read it, and, like the hon. Member for Bebington, I found a great deal wrong with the Committee's procedure.
The Minister had a very difficult job this afternoon, and I felt that he was very uneasy. He was trying to say in effect that natural justice was done. I do

not think it is disputed by anyone that we do not try people behind their backs, or even partly behind their backs. The hearing should be in public, and evidence should be capable of challenge by cross-examination. Both sides should be heard, and should be present throughout the proceedings. Allegations of crime or dishonesty should be made known to those against whom they are made, and should be strictly proved by those making them. The people accused should be given the benefit of reasonable doubt. Those are the rules of natural justice. Can the Minister tell me if any single one of them was followed in this case? Of course not.
There is still time for the Minister to think better of what he has done. He will be a very unhappy man in Bristol from now on. He knows it. He has from now until 10 o'clock. An offer was made earlier this week of something that might be done between about four o'clock and 10 o'clock. There is plenty of time, time to consult the Prime Minister, time for the Minister to save himself from dishonouring himself by having jumped too quickly to a conclusion that men should be condemned by a method which does not correspond with British justice.
I do not want to repeat the points made so well by the hon. Member for Bebington, who made them much better than I could have done. But although it has been touched on I should like to mention that the Committee tried to overcome the obviously inherent defect in its procedure by deciding that no names should be mentioned in the Report. People were referred to by their appointments, but it was known nationally and to everyone in the House who the senior men were, and the identities of holders of other appointments must have been known to many people. Identifiable people were in effect placed on a trial which they did not attend. Some of those included in the Committee's castigations were not even asked to appear before it to explain themselves, and those who did give evidence were, on a number of points, not informed of the allegations or given an opportunity to deal with them. That procedure offended every principle of justice, and I am astonished that the Minister should have swallowed it as avidly as he did.
Where do the Law Officers come into this? I gave notice to the Attorney-General yesterday that if I were fortunate enough to catch the eye of the Chair I should ask what part they played. The House should know. Were they asked to advise that the Committee's conclusions should be accepted? It is incredible to me that they should have advised the Minister to accept those findings if they were asked to give an opinion. When the Minister made his announcement the Attorney-General was sitting beside him. Answering a question put by one of his hon. Friends as to whether the papers would be made available to the Director of Public Prosecutions, the Minister said that after consultation with the D.P.P. the Attorney-General had decided that the evidence disclosed did not justify proceedings.
I do not think that there could have been a fair trial at the Old Bailey or anywhere else once the Committee's findings were published, especially once they were announced as having been accepted by the Government. Therefore, even if the evidence had been available, and even if, as the hon. Member for Bebington believes, it was in the public interest that there should be a trial afterwards, no fair trial could have been held because of the procedure followed by the Wilson Committee and the way in which its conclusions, as announced, would have prejudiced the trial. That may be why the Attorney-General decided that there should not be a trial. I do not know. We are entitled to be told.
There was to be no trial because there was not the evidence, but the Minister has decided, without going into it very much today, that there was evidence to justify the Committee's conclusions in paragraph 232 of its Report including the damaging conclusions affecting the honour of individuals and, I understand, affecting the good name of over 100 people, conclusions making serious allegations of dishonesty against individuals and groups of individuals. The Minister said, "Oh, but this was not a judicial proceeding or intended to be one." He said that the best guarantee of the fairness of the Committee's work was its composition. If he is right, one could get up, when appearing for the Crown in the

Court of Appeal, and say, "This appeal must fail because the judge was a good judge and a decent chap." That also is a remark which, in the years to come, I think the right hon. Gentleman will regret, because it is nonsensical.
Nobody questions the capacity of the members of the Wilson Committee any more than the capacity of a judge against whom an appeal is made is questioned. Just as judges make mistakes, one is entitled to point out, as has been pointed out so forcibly by hon. Members, that these sweeping allegations in the Committee's findings are not borne out by the information contained in the Report when one distils it.
What was the result of this undefended procedure which was so indefensible? As the hon. Member for Bebington pointed out, perhaps the worst thing was in paragraph 154, the crucial one relating to double charging, where the Committee concluded that the company's estimating staff were, in effect, deliberately perpetrating a fraud. But the Committee also said in that paragraph that
…the matter cannot be regarded as entirely free from doubt…
Surely, in fairness, that expression of doubt should have been put into the conclusion in paragraph 232, or the Minister might have mentioned it in his statement to the House. He might have said, "But on this there is a doubt." Having read the Report, I am still not sure what the doubt is. It would be interesting to know it so that we could measure it. That is another defect of the Report.
Alas, that expression has not appeared in the Press reports either. The nature of the doubt has not been revealed but the smear of the allegation remains. Since the Wilson Committee reported, the Minister has announced, on 18th March, a most glaring error running into several millions of £s in its calculations. The company has pointed out that the Wilson Committee over estimated profits by more than £10 million. Other inaccuracies have been mentioned in the debate. Such information as the Committee has given about the evidence it collected does not support the sweeping allegations in its conclusions.
I also regret to have to point out that it seems to let the Ministry down very much more lightly than the company. After all, the Ministry was the


custodian of the public purse in this matter. The company was, up to the extent of 40 per cent. or something like that, the mere collector of taxation. But the Committee lets the Ministry down with a gentle little bump, for in paragraph 232(4) it says:
…the D.T.C. fell seriously below a reasonable standard of competence.
One night have expected, if the tenor of the Report was to be evenly balanced, that it would have described the D.T.C. as guilty of gross negligence in the spending of Government money, so it is not too much to say of the Wilson Committee that there were an unjust procedure and inaccurate findings and, I am sorry to say, that it was transparently prejudiced.
I must confess, and I am proud to do so, that Mr. Davidson is one of my oldest and best friends, and has been for many years. He is a brilliant man of high integrity who has, I believe, firm friends of long standing on both sides of the House. He has a most distinguished record of service, both in industry and public life, in local government, charitable work and so on.
May I make this plea. In all this regard for individuals, while not over-looking any errors of judgment which may have been made, let us keep a sense of proportion. As business director, Mr. Davidson had a huge job in a vast organisation employing after the amalgamation 24,000 people. During the years 1959 to 1963 he negotiated no fewer than 14 international contracts of immense value to this country. In the first of those years the amalgamation took place with all the problems to which it gave rise for him.
Some of the overhaul and repair contracts were of course inherited from Armstrong Siddeley as a result of the amalgamation. The Wilson Committee's Report said that 89 separate overhaul contracts and 149 repair contracts covering 13 engine types and over 2,700 different spare parts were involved. Every contract was complicated and technical yet—this is why a sense of proportion needs to be retained—those contracts represent a comparatively minor part of the company's business with the Ministry and an even smaller part of its total business. Obviously Mr. Davidson could not be

expected to know all that was going on below him in that vast organisation any more than the Minister could be expected to be aware of the theft of £7,500 worth of equipment not very long ago by people in his Department, but we have not called for his resignation nor castigated him in any way.
One thing which should come out of the debate is a fresh appreciation of the economics of scale in Government and industry. I am one who believes in the limits of the economics of scale. We get to a stage when they are too big for a human being to appreciate what is expected of him. We have also to think of something else. We must think of the doctrine of responsibility as something which will have to be divided horizontally. I do not think we can much longer assume that when we have a vast administrative pyramid the few men at the top have to be held responsible for everything that goes on right down below. This will be for business to sort out. The subsidiary company is one quite good way of doing it. It may be that divisions within a Department should be regarded as to some extent separate so that we can fasten responsibility where it belongs.
I plead with the right hon. Gentleman—whom I have always regarded as a man eager and zealous, and, I should have thought, fair-minded in his public duties—to know and realise that he may have done some tremendous damage today which on reflection he would not wish to do. There is still time for him to put it right.

8.38 p.m.

Mr. Robert Sheldon: The right hon. and learned Member for Huntingdonshire (Sir D. Renton) blamed the Wilson Committee for being transparently prejudiced, yet towards the end of his speech he announced his own personal friendship with Mr. Davidson. I do not believe he has the right to castigate the Wilson Committee for being transparently prejudiced in its Report.

Sir D. Renton: I did give the specific reason which I thought was one worthy of being regarded by this House.

Mr. Sheldon: I do not blame the right hon. and learned Gentleman at all for referring to his friend and even for speaking in defence of his friend. I


should have thought that wholly admirable, but it was less admirable that it came at the end rather than at the beginning of his speech, and the distortion of the argument, to me at any rate, was transparent.
I start with a comment on the hon. Member for Gloucestershire, South (Mr. Corfield). The House is always sympathetic to hon. Members who defend their constituents, even when they may not be sure that their constituents are wholly right. It is a right and a duty which behoves everyone of us to act in this way, but when one makes speeches of that sort I should have thought the common sense of the operation would determine that those kinds of speeches should be made from the back benches, leaving the Front Bench to make a proper examination of the case. I do not believe we have had a proper examination of the case.

Mr. Corfield: I believe that if the hon. Gentleman studies my speech he will see that, quite apart from having anything to do with my constituents, it was a very careful analysis of parts of the Wilson Report which I regard as important. The mere fact that my constituents were involved has not, I believe, affected my judgment in any way at all; and I do not want to retract anything I said that might appear to have been said purely on a constituency basis.

Mr. Sheldon: I would differ strongly from that. I believe that it did affect the judgment and the speech of the hon. Gentleman. As a result, we have not had so far from the Front Bench opposite a proper examination of the issues before us. I would like first to turn to the question of overall profitability and the argument that a fair and reasonable profit as determined by the Standard Condition 43 could be so determined on a contract-by-contract interpretation. I, and I believe anybody who had been in industry and knew the problems of industry, would know that this was transparent nonsense.
But, as my hon. Friend the Member for Heywood and Royton (Mr. Barnett) has said, it is impossible to deal with contracts in this way. One cannot regard it on the basis that in future times one will be able to recoup profits or even

to hand them back. Profits are always arranged on a contract-by-contract basis, and that is what industry is all about. If the company knew that some prices were not fair and reasonable, the defence of overall profitability, I believe, is not available to it.
One matter that has been mentioned but which I feel has not been quite clearly established arises from a memorandum by the Comptroller and Auditor General in which it is stated that although the directors varied from time to time, it is certain that at all times the executive directors formed by far the majority of the board. To me this is quite clear. It is clear that the board and the executive directors were very largely interchangeable. They were moving in the same kind of circles, meeting frequently, and views were passed from one to the other. I do not believe that the distinction between the board and the executive committee is a very real one. Information available to the one would, over a time, be more than likely to circulate at all levels; and, in my opinion, really important information would certainly be circulated at all levels.
Despite doubts over certain aspects of the knowledge of the two witnesses, I myself have no doubt in my own mind that they had knowledge of the general profitability of the overhaul repair contracts, and to me the most important piece of evidence lies in the financial reports. These were financial reports submitted on the engine repair contracts and they were available in a form which would enable the reader to find out the level of profitability at a casual glance. These are very expertly prepared, and I believe that anybody with even the faintest knowledge of business, or even those without any, would be able to find rapidly and very easily the amount of profits from the various contracts. They are set out in graph form that can be read from 10 yards away, almost from the other side of the House, and one can clearly see the level of profitability. That was available and the executive committee had it available freely. The mere flicking over of three or four pages, taking only a few seconds, would have given an indication of the size of profitability that was being obtained.
It might be thought that this might form a small part of the profits of the


operations, and was not even worthy of that kind of attention, but we know that in one year nearly £1½ million was made from these overhaul repair contracts—nearly £1½ million out of a total profitability of the company at that time of something over £4 million. It formed a very substantial proportion of the profits of the company. Having so important a factor as a large part of the profitability of the company in so readily assimilable form conclusively proved to me, on my understanding of industry and the way on which top management works, that the high profitability was known at a very high level indeed.
The relationship between the attention given by top management to certain company matters and the percentage of profits arising from those matters is very close. It is clear to me that if a large amount of money had been concerned, the attention would have been greater than if it had been a small amount. A small percentage of the profits of the company might have been overlooked if one assumed a certain level of incompetence. A modest percentage of the company's profits might have been overlooked if one assumed gross incompetence. But I find it impossible to accept that a percentage of profit, which may have been as high as one-third of the profitability of the company as a whole, was overlooked, whatever level of incompetence one might attribute.
There is a great danger of misconceiving the way in which industry works. Those who are responsible for large profits in any organisation are not ashamed of them. They do not keep them quiet. They do not hide them. They are intensely proud of them. Those responsible for a very high level of profit compare themselves with others in the company which do not contribute so effectively to the total profitability. There is very good reason for their pride, because profitability has a very important bearing on their promotion prospects and the pay which they will enjoy. So they spread the good news. That is what always happens in industry. Those responsible for high profits, be they in engine repair contracts or anything else, spread the good news and do not conceal it furtively.
The argument that the company was far too busy with the less profitable aspects of the business, that it had, in some peculiar way, invented a new management technique—management by exception—is blatent nonsense. Any system of control which says, "We do not know what the profitability of those earning the profits is because we are too seriously concerned with those making losses" could not exist in our industrial society. It does not happen in this world. People may not be very concerned about those elements which are earning high profits because they have no idea that the profits are at a certain level and they are proceeding at that level. But they do not proceed on the basis of ignorance and leave those areas alone because they do not know.
We frequently find that in this situation a company might well let a profitable sector continue on a steady level, because there is no great excitement in it. But when it contributes to the proportion of the profits on a level that this did, the company knows about it and the good news gets around.
The assumption of a massive degree of incompetence, so massive as to make a caricature of an industrialist, something like an idle, golf-playing playboy director, did not fit the people whom I saw before me in the Public Accounts Committee. This view was quite inconsistent with that which I formed as to the ability and characters of the witnesses before me.
On the general question of these investigations, I, too, am not happy about the way in which we arrange these things. When the P.A.C. decided to have this investigation, it had very much in mind the way in which Government Departments are investigated and appear before the P.A.C. When Permanent Secretaries come before us, if there are any untruths, prevarications or concealments we know that they will all turn up during subsequent investigations in the following year, when the Comptroller and Auditor General goes round again. This means that one can assume a much higher degree of certainty in the relationship than one can with a company, where large sums of money are at stake.
When companies come before us they know that if they escape from an investigation they are unlikely to come up again. All the factors making for this kind of investigation are more difficult in the case


of a company than in the case of a Government Department. The Public Accounts Committee system of approach which is devised for the one is unlikely to be so successful for the other.
We know that the Public Accounts Committee proceeded by asking for the chairman of the company, as it would, in the case of a Government department, ask for the Permanent Secretary, who would be asked to bring with him whomsoever he wished. The analogy with the Permanent Secretary and his officials is complete.
In the case of a firm this method is not adequate. At the outset, the Public Accounts Committee is not in a position to know the person with whom it should request an interview. In the future we must be much more certain whom we wish to investigate, and make sure that the preliminary work is done in a more satisfactory manner.
I do not think an investigation in the firm concerned by the staff of the Comptroller and Auditor General is likely to be a very useful way to proceed, although I hope to see something of this kind. Possibly a firm of auditors could join forces with the staff of the Comptroller and Auditor General on these special occasions, in order to find out the facts. This would give the Public Accounts Committee something on which to start its questioning.
In the case of a firm, the Public Accounts Committee cannot proceed by asking for the chairman and questioning him. There is not enough evidence and not enough body of fact on which to proceed. We need to find a method of discovering what goes on in the firm and to ascertain certain facts about the firm's relationship with the Government before the investigation starts.
The important lesson that we must learn in regard to contracts between Government Departments and private industry is that, although equality of information and post costing will be very valuable, they will not be enough.
Despite the managerial revolution, we still have entrepreneurs whose main purpose in life is profitability. Given the system that we have, this is perfectly right. When we are dealing with very large sums of money, we cannot assume that in a difficult situation the temptation

may not prove too great, and we might find ourselves with scandals equal to or greater than the one we have before us today.
Although equality of information as a principle is something that has to be accepted, we need to ensure with certainty in a way that we have not had before that the Government are able to get the information that they require and the sort of bargain to which they are entitled by the great purchasing power of the country.
When we look into it carefully we shall have to accept that the only way by which we can be sure of getting what is our right is to get the Ministry of Technology men into the factory so that they know what is happening on the workshop floor and in the costing offices. In the United States this is done. In aircraft firms in the United States there are Government offices within the plant. They have their cost accountants, their production engineers and a team of people going round the factory and knowing as much about the factory as the firm itself knows. We need to do the same thing, not only to check what goes on and to prevent abuses. We need these people there so that they can learn something about the way in which the industry works.
One of the great weaknesses of our civil servants is that they have insufficient industrial background. There is no easy solution to give them that and the sort of experience that can only come from industry. One way to help would be by getting them into the factories, initially to check and to learn, in that way making their contribution and creating what the hon. Member for Orpington (Mr. Lubbock) referred to earlier when he talked about some of the advantages of a partnership between the Government and industry. By doing that, the country could take advantage of proceeding not on a cost-plus basis but with the possibility of finding the ultimate solution whereby an agreed formula could be worked out under which, if industry was more efficient, there would be profits to share between the manufacturer and Government, and, if there were losses, those, too, could be borne between the Government and industry. In that way, we could find ourselves getting the kind of people whom we want to see in Government Departments and, thereby,


achieving an improved relationship between Government and industry which I hope to see.
It is quite clear to me that there will be more investigations of this kind in the future, however effectively the Government do their work. We have many more examples of the Government working with industry. We have the Industrial Reorganisation Corporation; there is the Industrial Expansion Bill, and there is a whole host of ways in which the Government will have to assist industry in many other ventures. These new relationships are likely to be extremely valuable but, if they are to be most fruitful, they have to be on the basis of understanding between the one and the other. This debate is likely to contribute to that end.

8.57 p.m.

Mr. John Smith: I have an interest in this matter in that I am a director of Rolls Royce and, as you know, Mr. Deputy Speaker, I had not intended to intervene in this debate unless my colleague Sir Reginald Verdon-Smith were disparaged. Instead, he has been victimised; and in a way which will greatly damage the concept of voluntary service—an advantage that this country has over many others. If this matter should be pressed, I hope that Sir Reginald's colleagues on all the public bodies of which he is a member will resign with him in protest.
As I said, he is a colleague of mine. Hon. Members know me, more or less. I dare say that they are fairly good at judging. They will know what value to place upon what I say; and I say with great emphasis that it is quite inconceivable that Sir Reginald Verdon-Smith could act in bad faith. It is just as inconceivable as it was for those honourable men whom the Prime Minister dragged through the Bank Rate inquiry.
Sir Reginald has neither the motive nor the character for such a course of action. My life has been greatly enriched by knowing him. He is an asset to the country, but he is now prevented from contributing to the country by a Minister who arrogates to himself the function of a judge.
The House should know that the Government made strenuous efforts to

get Sir Reginald to resign from his public positions well in advance of this debate. That information should be considered in the light of the Minister's intervention when the hon. Member for Orpington (Mr. Lubbock) was speaking.
I hope that hon. Members will accept what I say about Sir Reginald. If there are some who cannot, I ask whether it is conceivable that an attempt to deceive on this scale could possibly remain unknown in a firm of that size. Hon. Members on both sides know how very difficult it is to keep a conspiracy secret, even among a few people. I think I need say no more on that.
Of course, Sir Reginald is ultimately responsible for all that happened, but that is not a just cause for trying to ruin a man. It seems to me that there is some misunderstanding of what happens at the board meetings of very large composite companies. For example, the agenda for a meeting of the board of Rolls Royce is made up in hard covers and is well over an inch thick. At some board meetings this book will contain no reference at all to profit margins, or perhaps only for each division as a whole, made up in the form of a net aggregation of many invisible pluses and minuses.
This means that we must recognise a distinction between knowledge actually possessed by a person and knowledge to which he has access. This distinction was recognised by the Wilson Committee when it was considering the position of the Department. On page 26 it states:
D.T.C. were formally notified of the modification, as they were included in the 'circulation list', but they have frankly admitted to us that they did not notice this particular modification out of the many hundreds which were notified to them…
This distinction, recognised for the Department, should also be recognised for industry.
Furthermore, whatever the hon. Member for Ashton-under-Lyne (Mr. Sheldon) may say, boards of large composite companies do not want to hear about a matter which is going all right; they concentrate on what is going badly. They also concentrate on the future—on obtaining new business. They do not wish to hear about business which has already been obtained. It is absurd to suppose


that Sir Reginald Verdon-Smith was involved in an attempt at deception.
A lot of nonsense has been talked about the profits actually made. There has been difficulty in establishing the amounts and percentages involved. Paragraph 177 of the Wilson Report illustrates this, and so does the fact that a correction to the Report was necessary. It is fair to point out that although Sir Roy Wilson indicated that this correction arose from "recent assurances", the facts were plain from the original documents. All this arises from the difficulty of defining the notions involved.
There have been several examples of that today. For example, a profit of 100 per cent. on cost is a profit of 50 per cent. on sales. Often people do not say which they mean. What is "capital employed"? What are "costs"? What are "departmental conventions"? This is not arithmetic, but a complex and little understood art which I do not think was fully understood by the Wilson Committee, whose Report was inconsistent in parts, emotive in parts and sarcastic in parts, thereby greatly reducing the value of the document. The Committee suffered from serious defects, as the hon. Member for Bebington (Mr. Brooks) so admirably pointed out, reinforced by my right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton).
We have been obsessed here with profits, but I can tell the House that the return on shareholders' funds—which is the final test of any industry—in the aeroengine business is far too low at the moment to make certain of its future. When we discuss these matters we should remember that. The return is too low to ensure the future of that industry, and especially if the industry is treated as a whipping boy.
Finally, instead of considering profits, do we ever consider value received? Do we receive good value from Bristol Siddeley and the aero-engine industry of this country? Pilots, passengers and airlines all over the world give us the answer to that. I hope that we can drop this matter, which is distracting the aero-engine industry from exports.
For example, this fresh inquiry into all the previous contracts of Rolls Royce

will take until 1971 to complete, and I should like to know what it is thought will be the cost of that. We are not I hope, to be a nation of book-keepers. I hope that we can get away from the world of the muck rake, the witch-hunt, and the postmortem to which we have sunk, and set our sights on the sky where these engines are a source of pride, and I am happy to say, a source of profit to the country as a whole.

9.05 p.m.

Mr. John Ellis: The Third Special Report from the Public Accounts Committee represents the second attempt by that committee to clear up a certain matter. The Committee made it clear that it was considering the issue not from the point of view of all the questions which could have been asked the first time, or what questions it ought to have asked, but merely whether it was misled or lied to then. That was the extent of its inquiry.
My hon. Friend the Member for Bebington (Mr. Brooks) made it clear that even when the P.A.C. wanted to use evidence which had been presented to the Wilson Committee it thought it right not to do so. The limitations of this Report are, therefore, fairly obvious, and I can only say that even on this narrow basis of evidence the case, as my hon. Friend the Member for Oldham, East (Mr. Mapp) said, is not proven either one way or the other.
The Committee was split on what I call the fools or knaves Amendment. The Report says at page:
either, one, the witnesses were aware, before 1964, that the profits on the overhaul contracts were more than fair or reasonable; or, two, they were incredibly ill-informed on the source of a substantial proportion of the Company's profits. Bearing in mind the witnesses' knowledge of the affairs of the Company, to accept the second alternative would be to impute to them too great an ignorance".
There we have the nub of the argument.
The House tonight is considering not merely the Report from the P.A.C., limited though it is, but the report from the Wilson Committee. Having read the evidence, I think that we should bring a certain amount of common sense to bear on the issues involved. In view of the Ferranti scandal, in view of the Lang Report, and in view of everything that we know, is it credible to suppose that the


board of this firm did not discuss the contracts' side of its business, and what the level of profit was? Apparently the board discussed everything under the sun except profits.
I find it incredible that the executive members of the board, who were said to know more than the others, did not discuss the matter with all the members of the board when they knew that this inquiry was pending. If hon. Gentlemen opposite can believe that, they can believe in Santa Claus and the red-nosed reindeer. It is incredible that in view of what happened in Parliament and in the country, the board did everything but discuss this issue. I therefore welcome the Report, and I shall support it in the Lobby tonight.
I, too, have constituents who worked for Bristol Siddeley, and now work for Rolls Royce. We must have a viable industry, and I am therefore concerned to clear up this whole matter. I hope that we shall look particularly carefully into the sub-contracting work that is done for the industry.

9.10 p.m.

Mr. Robert Carr: We have had a great deal of detailed and very closely reasoned argument about this sad affair today, but in winding up this debate for the Opposition I shall try to concentrate on the main issues. The first main issue—and I am glad to say that it is one on which we can all unite—is that we utterly condemn the exorbitant profits that were made in this affair. We condemn the company, we condemn the Department, and we must make that clear. I take no joy in doing so—nor, I am sure, does anybody else. It would be wrong to take joy in doing so, but it is a task we must perform if we are to do our duty as the House of Commons.
It is a day of sadness and shame for both the company and the Department. A great company, with an outstanding record of contribution to this country in technological advance, in exports, in training people—a great record—and yet in this matter this great company has failed very sadly, to put it mildly, to live up to its responsibilities. And a Department responsible for spending a very large sum of public money—I have not the figures, but I imagine it is probably a larger sum of public money than almost

any other Department—has failed in its elementary duty of safeguarding that expenditure. So Parliament ought to condemn and we do condemn, unanimously, from all sides of the House.
This has been one of the most serious, most unhappy and, I am afraid, as it has turned out, most distasteful debates I have known since I have been in the House of Commons. I always knew that it was bound to be a serious and a sad debate, but it is a debate which has now brought in a principle which is, or should be, at the very heart of our Parliamentary system—namely, the principle of Parliament being the protector of the rights and freedom of the individual citizen and the guarantor that he will receive justice. I am sorry that I did not hear the speech of the hon. Member for Bebington (Mr. Brooks). I have read a report of it and, whether or not some of his hon. Friends agree with him, I think all the House would like to do honour to the way in which he approached the subject. I would like to say the same about my hon. Friend the Member for the Cities of London and Westminster (Mr. John Smith).
Individual citizens' rights and justice have been brought into this debate. The right hon. Gentleman the Minister of Technology started his speech by stressing the danger of this being an explosive subject and the need for moderation and a dispassionate and objective approach. I welcomed this, and my hopes rose that the House of Commons might do its duty unalloyed, and for much of his speech the right hon. Gentleman lived up to his claim. But to some extent at the beginning and to a much greater extent at the end, by announcing action which brands two men at least and destroys their reputation with no adequate proof of guilt, he took a course which I hope this House of Commons will, always, reject. We censure the Minister for that action. Even now, I join my right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton) in pleading with the Minister to think again as to whether he will be true unto himself or unto his Government, or doing his duty to this House of Commons or those it represents, in taking the action he is proposing to take.
There was one statement which the right hon. Gentleman made with which, I


am glad to say, I can wholly agree—that our main aim must be to prevent the recurrence of this sort of thing. As I have spoken rather severely, and shall do again, about one part of the Minister's approach, let me say that I appreciate and will try to reciprocate the non-party political sense in which he moved the Motion. It was a Conservative Government which was in power when this happened, and, therefore, he might have chosen to make this a great party political point; but he did not do so, and we respect him for that. He recognised, as we recognise, that, in grappling with these terrible subjects and these complexities of Government procedures and contracting, it is not the party complexion of the Government in power or the capacity of the Minister—although capacities of Ministers vary—which matters but something much deeper, and I am glad that the right hon. Gentleman took the approach which he did.
But if we are to get this matter right, we must do a good deal of hard thinking about how the Government do business with their contractors, because we must realise that this deplorable event was the product of an inadequate Government contracting system. As I said, over two years ago, in the debate on the Plowden Report on the aircraft industry, the customer in the end gets the sort of supplier he deserves. The Government have been a bad customer for many years in the sense of an inefficient customer, not demanding in the right way and too often demanding in the wrong way.
Many of us on both sides with experience in industry will know, whether one is dealing with private or public customers, what a difference the quality of the customer makes to the efficiency and, indeed, to the integrity of the supplier. The Government have been such a bad customer that many industrial companies which can afford to do so have, for many years, deliberately avoided Government contracts for this reason. Some companies cannot do that, but many who can have done so because the Government are a bad customer.
We must agree that the Government and industry should look at every contract on its own and not try to justify excessive price on one contract by some general overall profitability argument. As a principle, that is unexceptionable; but

it must be applied both ways, and hither-to the Government have not done so. If a profit is to be fair and reasonable, it must apply to both sides, and if the Government as customer start by fixing a standard rate of profit which, if all goes well, is very low and cannot be exceeded, and, on the other hand, when things go wrong, give the suppliers no chance to recover losses, one of two things must happen—either the Government will have no contractors to do business with them, because they go out of business, or, inevitably, this overall profit outlook will be the order of the day, with various degrees of consciousness and unconsciousness in the psychology and mode of conduct of companies.
This cannot be avoided, whatever one may say. There are therefore various important needs which the Government must establish in future as a customer. First, we must establish a position in which there are no abuses on either profits or losses. Then we must avoid the position in which through the terms of fixed price contracts being unsatisfactory industry tends either to move towards a kind of cost plus contract and will not accept anything else, or becomes more and more reluctant to do business with the Government at all.
We must realise that if the actual procedure for fixed price contracts is such as to screw industry down too hard and in too much detail, the tendency will be for contractors who must do business with the Government on these terms, to over-provide, to make pessimistic estimates of manpower and so on required because if they do not they will be in danger of not making a sufficient profit to remain in business. The result of this is that profits which are higher than they should be will sometimes be made.
My hon. Friends and I therefore welcome the proposals at last put forward for reform in this matter. I refer to the proposals announced in the Chief Secretary's statement in the House on 26th February. We are disturbed—I say this without wishing to make a party point—about the length of time that it took, because the Lang Committee was appointed after the Ferranti affair in 1964 and the second Lang Committee's Report was available by the end of 1964. We are now a quarter of the way through


1968. The length of time that this has taken is disturbing, and we are therefore particularly concerned that progress should now be faster in translating what I understand are still not much more than agreed guide lines of action into practical procedures for the future.
I emphasise a point made by the hon. Member for Heywood and Royton (Mr. Barnett)—the need to avoid cost-plus. This practice is bad for the Government, for the companies concerned and for the efficiency of British industry. There is no spur of either competition or incentive. If we are to avoid cost-plus it is important to settle prices quickly. I appreciate that that is easy to say but difficult to do.
One of the essential ways of doing it, of course, is to get a much better profit formula and review procedure, such as that outlined in the Chief Secretary's statement of 26th February. Once a contractor can see a fair profit if he does his business properly, with the opportunity of earning more than that standard profit if he proves extra efficient, with the Government sharing in it, then the "stylised game" as it is called, will largely disappear because both sides will have an incentive not to out-manoeuvre each other but to get a price fixed quickly and get on with the job.
This fixing of a proper profit formula and review procedure is as much in the interest of the tax payer as it is in the interest of the shareholder of any company. I therefore beg the Chief Secretary to see that these guide lines are converted into practicalities as quickly as possible and to ensure that his great Department, the Treasury, does not befuddle the procedure with a minutae of detail with the result that the ultimate purpose is defeated. We have a big chance to move into a new atmosphere in this matter, and I hope that it will be taken. I am sure that it can be done, if the desire is there.
I do not believe that the Plowden Committee actually used these words, but the need to get bureaucracy off the back of the industry is a phrase which has been used to me by its members and was in effect a major theme of their Report. If this could be done, some welcome reductions in staffing costs would result and we would move towards an immensely important improvement in staffing;

namely, a smaller number of more highly qualified, better paid people who are more able to negotiate with industry on an equal footing of status, professional skill and training.
I do not criticise the civil servants who do their work as hard and as well as they can; but we need more highly qualified professional people who are able to negotiate with their opposite numbers in industry on an equal footing. If they are able to do this they will gain the respect of industry, and confidence between the two sides will grow. I therefore ask the Chief Secretary to assure us that he will make as quick progress in this field as he can and convert the guide lines of his statement into practice as soon as possible.
I fear that for the last ten minutes of my speech I must return to some less pleasant and personal matters. They stem from the position of the individuals who have been pilloried in this debate and in the Report of the Wilson Committee. This brings up the whole question of the adequacy of the Wilson Committee's Report. The Minister, in opening, referred to our approval at the time of the announcement of both the membership and the terms of reference of the Wilson Committee. I confirm that we gave that approval. I confirm that we still stand by that. When we invite men to undertake inquiries of this kind, we give them a very difficult and very thankless task. We ought to be grateful to them. We are grateful to them.
We on this side broadly accept, as I have already made clear, their conclusions about exorbitant profits and about the failings and inefficiency of the Department and the misdeeds of the company. We accept all those broad conclusions, even though we think that some of the Committee's argument is rather sloppy; and the more it is examined the more holes can be picked in it. Although we can and should do that, nevertheless I make it clear as I did at the beginning of my remarks that we accept the broad conclusions and condemnations about the exorbitant profit and all the rest of it.
We agree, on the whole, that the Committee's procedure was adequate for the purpose of discovering whether these profits were exorbitant and whether


there ought to be general condemnation. Where we part company is that we do not agree that the procedure was right when it begins to lead on, not just to the general establishment of facts and blame in terms of organisations, but to identify and blame a few selected individuals—not blaming selected individuals in a minor way, but putting blame on them to the extent of condemning them, in effect, for dishonesty and even for the commission of criminal offences or something very near to that. This is not the way in which this should be done.
I suggest that one of two things should have happened. When the Wilson Committee in its deliberations found itself leaning towards the position where it thought that it would have to make such imputations against people, one thing it should have done—one possible course of action—was to have asked to be allowed to stop its inquiries and to hand over the papers to the Director of Public Prosecutions.
Secondly, if for some reason that was not practical and the Committee went on, as it did, to complete its Report, and when the Report was in the Government's hands, the Government had one of two duties. Before publishing this Report, they should either have found a way, by consultation with the Attorney-General, of bringing these charges home or, if they came to the conclusion that they could not bring the charges home, they should have amended the Report before publication and have said so or produced their own report, or commented on it. Right hon. Members opposite can look pained if they wish, but I am sure that this Report ought not to have gone on the public record containing these grave imputations against identifiable individuals without more evidence to support the charges.
That was not the end of the failure of justice. There was the question of selectivity. There is a case, however hard it may be, for putting the blame on the chairman alone. Just as a Minister may have to shoulder the sins of his Department, so the chairman of a great company may, however hard it may seem, have to shoulder all the sins of his company. Once the Government go beyond 
that and begin to pick out individual executives, what is the justice in being so selective? Why choose only Mr. Davidson and one or two people subordinate to him? Why not other senior executives who are not mentioned, blamed or cleared? [HON. MEMBERS "The whole lot."] I hear hon. Members say, "The whole lot." All right. But if they are guilty they must be proved guilty. To name one or two in this way is disgraceful.
I come back to the procedure. If one goes beyond the chairman, how can one possibly leave out the managing director? Not only must his have been the chief executive responsibility, but he ought to be the man best able to clear up the issues of dishonesty and intention one way or another. In other words, he was the most important witness. God knows, I do not want to implicate the managing director at this time. He is a great public figure who has contributed a great deal to this country. He also happens to be a friend of mine. But if we must get down to placing responsibility on individuals, his evidence was vital, and he ought to have been included in this inquiry.
Yet the Public Accounts Committee, because of its procedure, did not question him at all.

Mr. Boyd-Carpenter: There has been some misunderstanding about this. During the original investigation, the Public Accounts Committee proceeded according to its normal practice of summoning the chairman. The selection of other witnesses to help him was made by the chairman and by no one else.

Mr. Carr: I fully accept that and I was going to make it clear. For reasons which are well understood and well justified, the Public Accounts Committee did not examine the managing director. But I understand that the Wilson Committee interviewed him for only a short time very early in its inquiries, and there was considerable difficulty, I understand, in agreeing the record of his evidence.

The Chief Secretary to the Treasury (Mr. John Diamond): Is it a fact that that gentleman was called as a witness? How does the right hon. Gentleman know?

Mr. Carr: One reads so many papers about this matter. If I am wrong, I withdraw that. But I do not in any way withdraw my main point that his evidence was vital, and his views and the Committee's opinion of his views also were vital if we are to make imputations of responsibility at a personal level.

Mr. J. J. Mendelson: The Chairman did not ask for him.

Mr. Carr: That relates only to the Public Accounts Committee's procedure. The Wilson Committee was perfectly free to do so, and may have done so, and ought to have made known its view of the managing director's views in its Report.
Our Amendment was necessary even before this afternoon, because of the procedures followed. It has become all the more so after the Minister's opening speech today, as two named men have been found guilty and have now been sentenced by the Minister.
If they are guilty, I condemn them. We would all condemn them from this side as strongly as anyone. If they are guilty, they ought to be branded. But they must be proved to be guilty before they are branded, and these men have not been proved guilty in any sense understood by British justice. I hate injustice, and I hope that the House will always hate it.

Mr. Diamond: Of course.

Mr. Carr: The right hon. Gentleman says, "Of course", but his Government's action is a shame and a betrayal of that principle.
I am no lawyer, but it seems to me, as an ordinary citizen, that there are three requirements at least for natural justice. First, a man should be told clearly the charges against him. Second, he should be able to see and study the evidence against him on which those charges are based. Third, he should be able to cross-examine that evidence and to call his own evidence in defence. Not one of those three basic rights of justice have been granted to these men who have been pilloried, condemned and sentenced in this Report and by the Minister today. This is indefensible. It is nauseating. If he adheres to this action the right hon. Gentleman is not fit to hold office ever again. That is the stuff of which tyranny

is made. If it is not nipped in the bud it will grow, and I beg the Minister to think again.

Mr. Benn: Before the right hon. Gentleman concludes, let me be quite clear about what I said. The right hon. Gentleman said that what I should have done when I received the Wilson Committee Report was to suppress from publication those parts that referred to individuals, and that despite the factors that had emerged from the Report those people concerned who are or were currently advisers to the Government, the references to them in the Report having been deleted, should have continued in their position as advisers to the Government.

Mr. Carr: I did not say that. I said that the matter should not have been reported in this form. It should either have led to a prosecution or the gentlemen concerned should have been given a proper right to reply and defend themselves according to the three principles of natural justice which I have just defined.
We condemn the exorbitant profits, the carelessness and inefficiency of the Department and the company's indefensible and dishonest behaviour in this matter. We shall join, too, in condemning all the individuals responsible when, but only when, the grave charges are sustained against them by proper and full procedures of justice. Mulcting the taxpayers of money is a very serious matter. It is a vital duty of Parliament to try to stop it, and, if it happens, to condemn it. That we have done, but in the long run men matter more than money, and it is an even more vital duty of Parliament to be the protector of justice and the rights of individual freedom.

9.37 p.m.

The Chief Secretary to the Treasury (Mr. John Diamond): The right hon. Member for Mitcham (Mr. R. Carr) began his speech in terms of extreme modesty, understanding and helpfulness. He reciprocated my right hon. Friend's careful avoidance of making this in any sense an inflamatory occasion or a party occasion. He recognised that these events occurred mainly during the previous Administration, and I am particularly grateful that he also recognised that the way forward was along the lines I had put to him.


I therefore want to reciprocate as far as I can, but I shall have to say something in view of what the right hon. Gentleman thought fit to say about my right hon. Friend and his judgment. I shall naturally want to make that position absolutely clear shortly.
As the right hon. Gentleman said, this is an unhappy occasion, but I do not regard it as wholly unhappy. Certainly we have had to discuss difficult topics. We have had to discuss profit-seeking carried to excess, findings of falsehood, intentions to deceive, widespread Departmental inefficiency, misplaced loyalties and a variety of issues of that kind. We have also had to discuss damage to individual reputations, which I agree is the most serious of all the topics. It is a pretty depressing group of topics. But whilst they undoubtedly make this an unhappy occasion, it is one from which lessons can be drawn—and I believe that they are being learned—of a new relationship between Government and industry. That is why I do not find it a wholly depressing occasion.
The various Reports we have discussed describe a series of events arising from a pattern of relationship between the Government and its contractor in which the directors' duty to maximise shareholders' profits has been narrowly conceived, without adequate recognition of the parallel duty to the whole community, of which every shareholder is a member and most are contributing taxpayers. That relationship is rapidly becoming out-moded, and is gradually being replaced, I believe and hope, by a new one which recognises the respective rôles of the Government on the one hand and the contractor on the other, while at the same time containing to a large degree a sense of partnership.
That relationship in future will be based on a desire to protect the individual through equality of information, to encourage the contractor by rewarding efficiency and by putting a premium on managerial skills rather than on slick negotiations. I want to deal first with the major issues raised in the debate in the light of this encouraging prospect rather than in a morass of rather sordid events.
I want first to draw the attention of the House to the procedures adopted by

the Wilson Committee. I remind the House of its membership in view of what has been said by a number of hon. Members. The Chairman is a distinguished lawyer, who is President of the Industrial Court. His appointment as a member of the new Race Relations Board was warmly welcomed only on Tuesday by the right hon. and learned Member for St. Marylebone (Mr. Hogg). One of the other two members is a very experienced former civil servant, now holding important positions in the City in several directorships, including a large finance house, and the other is an eminent and much respected member of the accounting profession. This is hardly the kind of committee that would conduct procedures which could in any way be unfair to individuals or deny them, in the words of the Amendment,
…the basic rights of natural justice.
Its impartiality, I should have thought, was self-evident and I can only say that I am glad that the right hon. Gentleman welcomed the appointment of these men to the Committee on behalf of his party in April, 1967.
Let us see what the procedures were. They were that the hearings would be conducted informally and in private; that the Department and Bristol Siddeley would give the Committee access to all their relevant documents but that they would not give such access to each other; the names of witnesses would not be mentioned in the Report; a verbatim record of the evidence given would not be made but the notes taken of each witness's evidence would be sent to him for agreement; that all the evidence of witnesses would not be published nor would it be disclosed to their superiors.
There are three important points I want to make about these procedures. First, as the Report itself points out, they followed the precedent of the inquiry into the Ferranti case set up by the last Government. Secondly, the procedures were discussed at a meeting between the members of the Committee, senior Departmental officers and, for Bristol Siddeley, Sir Reginald Verdon-Smith, Mr. Davidson and their legal representative. They were agreed by all concerned, including the Bristol Siddeley representatives. I cannot believe that they accepted that if the inquiry found any evidence of improper conduct it would be hushed up,


especially when one remembers that the first Lang Report contained critical observations of the conduct of both the then Ministry of Aviation and Ferranti Limited.
Thirdly, each witness who gave evidence to the Wilson Committee was given in writing a summary of the agreed procedures. This summary, the terms of which were agreed both by the Department and by the firm, made it clear that, while the Committee intended to avoid in its report any reference to individuals by name, it might not be possible to avoid reference to individuals by the office they held. The witnesses, therefore, were each to be fully on notice that the office they held might be identified in the Report, and I must say that I strongly rebut the suggestion in the Amendment and in the words used by the right hon. Gentleman that the procedures adopted were unjust.

Mr. R. Carr: May I make it quite clear that we do not question for one moment either the capacity or the impartiality of the three members of the Committee? Nor do we criticise the procedures, or deny that they were agreed, or say that they were unsatisfactory up to that point where they were attaching general as opposed to personal blame. The moment they get on to personal charges the people so charged, if they are to have natural justice, must know what the charges are, must see the evidence and have a chance to bring their own evidence and to cross-examine. The moment they get to that point of personal charges of this gravity, we need to have the procedures changed.

Mr. Diamond: The right hon. Member must understand that we are not making personal charges; nor was the Committee. [HON. MEMBERS: "Oh."] I must repeat, nor was the P.A.C. It was not making personal charges against the individuals to whom the right hon. Gentleman referred. [AN HON. MEMBER: "Why did he say it?"] The right hon. Gentleman wished to intervene, so I gave way. I am glad that he accepts its undoubted impartiality and the way in which the Committee carried out its work. Even if I must repeat it, he will recollect that these procedures were agreed throughout by those concerned, including some of the principal characters involved.
My next task is to remove any doubt there may be about the Government's views on their future relationship to certain individuals who hold positions of great responsibility in the company. Let me first deal with business matters. It is idle to pretend that our confidence has not received a rude shock. We cannot say that we believe—as indeed we do, and the Committee found—that we were being deliberately deceived by certain employees of the company, and at the same time pretend that our confidence in the employer is unimpaired. I could not pretend to say that.
We must at all times have in mind our responsibility as custodians of the public purse as the right hon. Gentleman—and I am grateful to him for this—himself said. Fortunately, this conclusion presents no problems in terms of future action for the new conditions of equality of information and post-costing, coupled with the new machinery and the profit formula that has been fully negotiated will, I believe, provide the necessary safeguards.
So much for the business relationship. Equally, it would not be possible to pretend that the findings of the inquiry, coupled with the conclusions of the Public Accounts Committee and reinforced by my knowledge of the course of negotiations for the refund, when a marked reticence was displayed, have not lead to a considerable diminution in the confidence the Government had in the judgment of those individuals and in their capacity therefore to continue to act as Government appointees on certain public bodies. That is the course of action which my right hon. Friend announced and that, so far as I am concerned, is the end of that matter.
I now turn to the much more acceptable topics to which the right hon. Gentleman referred. I welcome, first, that whatever difference of view there may be in the speeches which have been made, there is one thing on which everyone is agreed and united. That is our responsibility as members of the House of Commons to protect the public purse and to see that excessive profits are not made out of commercial relationships between contractors and the Government. It is certainly helpful to me to know that Parliament will be always ready to attach the greatest importance to its


responsibility in doing this and to protect the taxpayers who contribute to the public purse.
I must pay tribute to the Public Accounts Committee which on this occasion was, and on every occasion is willing to go to endless trouble and to any length to inquire into the complexities of any situation to ascertain the facts which will support or criticise the Government for pursuing or failing to pursue the public weal in this respect. But we must not forget that we are working in a field where the supplier is normally a private enterprise firm which regards its prime responsibility as being that of maximising profits in the interests of its shareholders and where the purchaser, the Government, are often, through the special nature of the purchase, denied the normal commercial safeguard of competition.
The first loyalty of an employee is to his employer. The first duty of a negotiator is to negotiate the best terms he can for his firm. The first duty of a director is to have regard to his shareholders' interests; and it is not surprising that in these circumstances there should develop a standard of values and a pattern of behaviour which take full account of these obvious responsibilities but sometimes pay too little regard to the responsibility to the community as a whole. In my view, such an attitude is extremely short-sighted, for it is only when the private enterprise firm takes full account of the proper needs of the community of which it is a part that it serves its own long-term interests best.
That such an attitude exists and can provide a breeding ground for difficulties of the kind we have been discussing today is beyond doubt. It follows, therefore, that new conditions should be introduced into the relationship between Government and contractor for three main purposes. The first, a very positive one, is to encourage this wider sense of responsibility; and equality of information does just that; and I am grateful to the right hon. Gentleman for what he said in that regard. It creates a sense of real partnership in place of what I can only call a catch-as-catch-can contest. I am grateful to the right hon. Gentleman for recognising what I mean by that.
The addition of post-costing, which was not always a view taken by both sides of

the House but which I hope now is, is based on the recognition that opinion becomes well-informed only when it takes account of hard facts, and the desire to achieve equality of information cannot be fulfilled unless, in appropriate cases, the facts in the form of all the relevant figures are made available. The second purpose is to make clear that negotiating skills alone will no longer suffice; they must be supplemented by skill in management, production and administration; and the possibility of opening up all books and records will secure this. The third purpose is a creative one. It is in the interests of both contractor and community that a contract should be carried out at the least cost. The way to improve the standard of living of the community as a whole is to allocate to each individual task the minimum of resources.
The contractor should always have, therefore, every encouragement to reduce his costs in this way. One of the major criticisms of excessively high prices is that they are a direct encouragement to inadequate efficiency, sloppy administration and wasteful management, and there is no need to reduce costs to the utmost if an adequate or more than adequate profit is being made without any effort. But we must follow the logic of the argument—and by "we" I mean hon. Gentlemen on both sides of the House. In this connection I am most grateful to my hon. Friend the Member for Heywood and Royton (Mr. Barnett) for what he said.
If, as I am asserting, it is in the interests of the community that costs should be reduced, it must be in the interests of the community that profit arising from such reduction should be made. If the sale price is fair, taking into account all the circumstances at the time it was fixed and giving full effect to equality of information, then it follows that it must be right that the profit made from further reductions in costs and from inventiveness and efficiency should go to reward those who are responsible; and we should not be timid in our acceptance of this proposition.
If at the end of the year such an efficient and profitable firm should feel disposed to make a contribution out of those profits to the welfare of the community and in the form of a modest cheque addressed to the collector of


taxes, I, as a Treasury Minister, would find it very difficult to refuse it.
It is my hope that the new arrangements will achieve these purposes. The new conditions of contract will provide for full equality of information and for post-costing in appropriate circumstances. I will not repeat the details now as I set them out fairly fully in the statement which I made to the House on 26th February. The profit formula should secure an adequate return in normal circumstances, and by "normal circumstances" I mean the profit accepted by the community. I refer to what the hon. Member for Orpington (Mr. Lubbock) said; I am sorry that I was not present to hear it.
The normal profit is a profit equivalent to that made by a business in dealing with the private sector as opposed to the public sector. We could not possibly accept as reasonable the proposition that the Government should remunerate industry more than the private sector remunerates itself. Therefore, the basis on which we have proceeded is to ascertain, as far as one reasonably can, the level of profit made by industry as a whole and to apply it in respect of Government contracts. We are engaged in the appropriate interpretation of that in accounting terms.
These arrangements will provide the necessary inducement to efficiency, will safeguard the taxpayer and the community, and will provide for any necessary review so as to keep the conditions up to date and relevant. I shall, of course, make it my business to keep

the House informed on how these matters are developing. The right hon. Gentleman thought that we had been taking rather a long time to reach an agreement with industry. It has taken a long time. It takes two to make an agreement, and to the extent that he is encouraging me to make progress. I welcome what he said. I hope that he will give similar encouragement in other quarters. I should be very grateful for that. There is no reason why this matter should not be finalised in a very short time indeed.

The events which we have been considering are unhappy ones, but they will have assisted in demonstrating without question that the old relationship between the Government and contractor could no longer continue unamended, and that what the Wilson Report calls "stylised game" and what the Bristol Siddeley pamphlet describes as "the traditional character of price fixing negotiations" are no longer acceptable. It is not without significance that we are discussing at one and the same time excessive profits going back over a number of years and arising out of the old system together with proposals for a new and better system which are gradually being implemented. Having drawn the right conclusions, we may, I think, properly forget the unhappy events and look forward to a period of greater co-operation, greater understanding and, I very much hope, greater efficiency.

Question put, That the Amendment be made:—

The House divided: Ayes 112, Noes 176.

Division No. 124.]
AYES
[10.0 p.m.


Alison, Michael (Barkston Ash)
d'Avigdor-Goldsmid, Sir Henry
Hastings, Stephen


Astor, John
Dean, Paul (Somerset, N.)
Heald, Rt. Hn. Sir Lionel


Atkins, Humphrey (M't'n &amp; M'd'n)
Deedes, Rt. Hn. W. F. (Ashford)
Hogg, Rt. Hn. Qulntin


Baker, Kenneth (Acton)
Dodds-Parker, Douglas
Holland, Philip


Bennett, Sir Frederic (Torquay)
Doughty, Charles
Howell, David (Guildford)


Biggs-Davison, John
Drayson, G. B.
Hunt, John


Birch, Rt. Hn. Nigel
Eden, Sir John
Hutchison, Michael Clark


Black, Sir Cyril
Elliot, Capt. Walter (Carshalton)
Iremonger, T. L.


Body, Richard
Emery, Peter
Irvine, Bryant Godman (Rye)


Boyd-Carpenter, Rt. Hn. John
Eyre, Reginald
Jennings, J. C. (Burton)


Boyle, Rt. Hn. Sir Edward
Fisher, Nigel
Jopling, Michael


Brinton, Sir Tatton
Fletcher-Cooke, Charles
Kaberry, Sir Donald


Brown, Sir Edward (Bath)
Foster, Sir John
Kershaw, Anthony


Bullus, Sir Eric
Galbraith, Hn. T. G.
King, Evelyn (Dorset, S.)


Campbell, Gordon
Gilmour, Ian (Norfolk, C.)
Kitson, Timothy


Carr, Rt. Hn. Robert
Glyn, Sir Richard
Knight, Mrs. Jill


Clegg, Walter
Goodhew, Victor
Lane, David


Cooke, Robert
Gurden, Harold
Legge-Bourke, Sir Harry


Cooper-Key, Sir Neill
Hall, John (Wycombe)
McAdden, Sir Stephen


Corfield, F. V.
Hamilton, Lord (Fermanagh)
MacArthur, Ian


Craddock, Sir Beresford (Spelthorne)
Hamilton, Michael (Salisbury)
McMaster, Stanley


Crosthwaite-Eyre, Sir Oliver
Harrison, Col. Sir Harwood (Eye)
Marples, Rt. Hn. Ernest




Marten, Neil
Rhys Williams, Sir Brandon
Vaughan-Morgan, Rt. Hn. Sir John


Maude, Angus
Ridley, Hn. Nicholas
Ward, Dame Irene


Maxwell-Hyslop, R. J.
Rossi, Hugh (Hornsey)
Weatherill, Bernard


Mills, Peter (Torrington)
Royle, Anthony
Webster, David


Monro, Hector
Russell, Sir Ronald
Whitelaw, Rt. Hn. William


More, Jasper
Scott, Nicholas
Williams, W. D. (Dudley)


Murton, Oscar
Sharples, Richard
Wills, Sir Gerald (Bridgwater)


Nabarro, Sir Gerald
Silvester, Frederick
Wilson, Geoffrey (Truro)


Neave, Airey
Smith, Dudley (W'wick &amp; L'mington)
Wood, Rt. Hn. Richard


Onslow, Cranley
Smith, John (London &amp; W'minster)
Worsley, Marcus


Osborn, John (Hallam)
Speed, Keith
Wright, Esmond


Osborne, Sir Cyril (Louth)
Stainton, Keith
Younger, Hn. George


Page, Graham (Crosby)
Tapsell, Peter



Peel, John
Taylor, Sir Charles (Eastbourne)
TELLERS FOR THE AYES:


Percival, Ian
Taylor, Frank (Moss Side)
Mr. R. W. Elliott and


Pym, Francis
Thatcher, Mrs. Margaret
Mr. Anthony Grant.


Renton, Rt. Hn. Sir David
Turton, Rt. Hn. R. H.





NOES


Albu, Austen
Heffer, Eric S.
Ogden, Eric


Archer, Peter
Hilton, W. S.
O'Malley, Brian


Atkins, Ronald (Preston, N.)
Hooson, Emlyn
Orbach, Maurice


Atkinson, Norman (Tottenham)
Horner, John
Oswald, Thomas


Bagier, Gordon A. T.
Houghton, Rt. Hn. Douglas
Page, Derek (King's Lynn)


Barnett, Joel
Howarth, Harry (Wellingborough)
Palmer, Arthur


Benn, Rt. Hn. Anthony Wedgwood
Howell, Denis (Small Heath)
Parkyn, Brian (Bedford)


Bidwell, Sydney
Howie, W.
Pentland, Norman


Bishop, E. S.
Hoy, James
Perry, Ernest G. (Battersea, S.)


Blackburn, F.
Hughes, Emrys (Ayrshire, S.)
Perry, George H. (Nottingham, S.)


Blenkinsop, Arthur
Hughes, Hector (Aberdeen, N.)
Price, Christopher (Perry Barr)


Booth, Albert
Hughes, Roy (Newport)
Price, William (Rugby)


Boyden, James
Hunter, Adam
Probert, Arthur


Braddock, Mrs. E. M.
Hynd, John
Rankin, John


Buchan, Norman
Jackson, Colin (B'h'se &amp; Spenb'gh)
Rees, Merlyn


Carmichael, Nell
Jackson, Peter M. (High Peak)
Reynolds, G. W.


Chapman, Donald
Janner, Sir Barnett
Richard, Ivor


Coe, Denis
Jay, Rt. Hn. Douglas
Roberts, Gwilym (Bedfordehire, S.)


Coleman, Donald
Jeger, Mrs. Lena(H'b'n &amp; St. P'cras, S.)
Robinson, W. O. J. (Walth'stow, E.)


Concannon, J. D.
Jenkins, Hugh (Putney)
Rodgers, William (Stockton)


Corbet, Mrs. Freda
Johnston, Russell (Inverness)
Roebuck, Roy


Cronin, John
Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)
Rogers, George (Kensington, N.)


Crossman, Rt. Hn. Richard
Jones, T. Alec (Rhondda, West)
Rowlands, E. (Cardiff, N.)


Dalyell, Tam
Kenyon, Clifford
Shaw, Arnold (Ilford, S.)


Davies, Dr. Ernest (Stretford)
Kerr, Dr. David (W'worth Central)
Sheldon, Robert


Davies, Ednyfed Hudson (Conway)
Lawson, George
Short, Rt. Hn. Edward (N'c'tle-u-Tyne)


Davies, Harold (Leek)
Leadbitter, Ted
Silkin, Rt. Hn. John (Deptford)


Diamond, Rt. Hn, John
Lee, John (Reading)
Silkin, Hn, S. C. (Dulwich)


Dickens, James
Lever, Harold (Cheetham)
Silverman, Julius (Aston)


Dobson, Ray
Lipton, Marcus
Small, William


Driberg, Tom
Lubbock, Eric
Snow, Julian


Dunnett, Jack
Lyons, Edward (Bradford, E.)
Spriggs, Leslie


Eadie, Alex
McBride, Neil
Steel, David (Roxburgh)


Edelman, Maurice
McCann, John
Stonehouse, John


Edwards, William (Merioneth)
MacColl, James
Strauss, Rt. Hn. G. R.


Ellis, John
Macdonald, A. H.
Swingler, Stephen


English, Michael
McGuire, Michael
Thomas, Rt. Hn. George


Ennals, David
Mackenzie, Alasdair (Ross &amp; Crom'tY)
Tinn, James


Evans, Ioan L. (Birm'h'm, Yardley)
Mackie, John
Urwin, T. W.


Faulds, Andrew
Mackintosh, John P.
Varley, Eric G.


Fernyhough, E.
McMillan, Tom (Glasgow, C.)
Walker, Harold (Doncaster)


Finch, Harold
McNamara, J. Kevin
Wallace, George


Fitch, Alan (Wigan)
MacPherson, Malcolm
Watkins, Tudor (Brecon &amp; Radnor)


Fitt, Gerard (Belfast, W.)
Mahon, Peter (Preston, S.)
Weitzman, David


Fletcher, Raymond (Ilkeston)
Mahon, Simon (Bootle)
Wellbeloved, James


Fletcher, Ted (Darlington)
Mallalieu, E. L. (Brigg)
Wells, William (Walsall, N.)


Foot, Michael (Ebbw Vale)
Mapp, Charles
Whitaker, Ben


Ford, Ben
Marks, Kenneth
Wilkins, W. A.


Forrester, John
Marquand, David
Willey, Rt. Hn. Frederick


Gardner, Tony
Mendelson, J. J.
Williams, Alan (Swansea, W.)


Garrett, W. E.
Mikardo, Ian
Williams, Alan Lee (Hornchurch)


Gray, Dr. Hugh (Yarmouth)
Millan, Bruce
Williams, Mrs. Shirley (Hitchin)


Gregory, Arnold
Miller, Dr. M. S.
Wilson, Rt. Hn. Harold (Huyton)


Grey, Charles (Durham)
Moonman, Eric
Wilson, William (Coventry, S.)


Griffiths, Rt. Hn. James (Lianelly)
Morgan, Elystan (Cardiganshire)
Winnick, David


Grimond, Rt. Hn. J.
Morris, Alfred (Wythenshawe)
Yates, Victor


Hamling, William
Morris, Charles R. (Openshaw)



Harrison, Walter (Wakefield)
Moyle, Roland
TELLERS FOR THE NOES:


Hazell, Bert
Murray, Albert
Mr. Joseph Harper and


Healey, Rt. Hn. Denis
Norwood, Christopher
Mr. Harry Gourlay.

Main Question put and agreed to.

Resolved,

That this House accepts the conclusions of the Report of the Committee of Inquiry into Certain Contracts made with Bristol Siddeley Engines Limited.

BUSINESS OF THE HOUSE

Ordered,
That the Proceedings on the Criminal Appeal Bill [Lords], the Criminal Appeal (Northern Ireland) Bill [Lords], the Courts-Martial (Appeals) Bill [Lords] and the Rent Bill [Lords] and on the Motions relating to Scottish Standing Committees, Procedure, Education and Science, and Local Government may be entered upon and proceeded with at this day's Sitting at any hour during a period of one and a half hours after Ten o'clock, though opposed.—[Mr. Gourlay.]

PUBLIC ACCOUNTS

Resolved,
That this House takes note of the Third Special Report from the Committee of Public Accounts.—[Mr. Benn.]

Orders of the Day — CRIMINAL APPEAL BILL [Lords]

Considered in Committee.

[Mr. SYDNEY IRVING in the Chair]

Clauses 1 to 46 ordered to stand part of the Bill.

Clause 47.

LEGAL AID.

Question proposed, That the Clause stand part of the Bill.

10.12 p.m.

Mr. Graham Page: I must protest, as I did on Second Reading, at the inclusion of Clause 47. It is a clause which repeals itself on 1st October next. It deals with legal aid, which is only remotely within the long title to the Bill, and it deals with a part of that subject which will become obsolete on 1st October, exactly one month after the Bill comes into operation.
The whole subject is dealt with very fully in Part IV of the Criminal Justice Act, 1967, which could have been brought into operation by the Minister before, or simultaneously with, this Consolidation Bill. I can see no reason whatever for delay in bringing Part IV of the 1967 Act into operation so that it coincides with the Bill and makes this long Clause 47 quite unnecessary. To include a Clause which has a subsection repealing the whole Clause one month after the Bill comes into operation makes a farce of consolidation.

The Solicitor-General (Sir Arthur Irvine): The hon. Member for Crosby (Mr. Graham Page) has previously referred to this point. Out of courtesy to him and to the Committee I should mention again—and there must be an element of repetition in this from the observations I have made earlier on the point—our reasons for Clause 47 appearing in the Bill. It re-enacts the provisions about legal aid before the Court of Appeal and before the House of Lords on appeal. These provisions basically stem from Section 10 of the 1907 Act and Section 10 of the 1951 Act, both of which were


modified by Section 8 of the Administration of Justice Act, 1960. The table of derivations at the end of the Bill show the other provisions concerned.
The position, as the hon. Member for Crosby fully appreciates, is that Part IV of the Criminal Justice Act, 1967, rewrote the whole of the existing law about legal aid in criminal cases, including criminal appeals, and the Act repeals all the provisions re-enacted in Clause 47 of the Bill. Part IV of the Act of 1967, however, does not come into operation by an Order under Section 106(5) of that Act until 1st October, 1968. This is one month after the coming into force of the other provisions of the Act of 1967 which are reproduced in the Bill. Accordingly, it is necessary to preserve the existing provisions about legal aid for that period. That is the explanation I offer, not for the first time, and I hope the Committee will accept it.

Mr. Graham Page: What the Solicitor-General has not explained is why it is necessary to postpone for one month the coming into operation of Part IV of the Criminal Justice Act 1967. Why could not all the legal aid provisions have been brought in on 1st September, and thus obviated the necessity of putting into the Bill a Clause which repeals itself in one month?

Question put and agreed to.

Clause ordered to stand part of the Bill.

Clauses 48 to 54 ordered to stand part of the Bill.

Clause 55.

SHORT TITLE, COMMENCEMENT AND EXTENT.

Question proposed, That the Clause stand part of the Bill.

Mr. Graham Page: I think that I ought to refer to the Clause, as I did on Second Reading, and say that my research then did not go far enough. Subsection (2) says
This Act shall come into force on the day appointed under section 106(5) of the Criminal Justice Act 1967 for the coming into force of section 98 of that Act.
As long ago as August, 1967 an Order was made bringing that Act into force on 1st April, but on 5th March the Government changed their minds and made an amending Order which, being a commencing Order, was not laid before the House. The amending Order postponed the operation of the 1967 Act until 1st September. I assume that this consolidation Measure will now come into operation on 1st September next by reason of the amending Order.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Schedules 1 to 7 agreed to.

Bill reported, without Amendment.

Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 55 (Third Reading), and agreed to.

Bill accordingly read the Third time and passed, without Amendment.

CRIMINAL APPEAL (NORTHERN IRELAND) BILL [Lords]

Considered in Committee.

[Mr. SYDNEY IRVING in the Chair]

Question, That Clauses 1 to 36 stand part of the Bill.

Clause 36.

RIGHT OF APPEAL TO HOUSE OF LORDS.

Question proposed, That the Clause stand part of the Bill.

10.17 p.m.

Mr. Graham Page: I invite the Solictor-General to explain why in this Measure we have not consolidated all the criminal appeal procedure in Northern Ireland. The Clause, and I refer particularly to subsection (1), relates to appeals from the Court of Criminal Appeal in Northern Ireland to the House of Lords, but there is the form of appeal in criminal matters from the Divisional Court of the Queen's Bench for Northern Ireland to the House of Lords, and I think that it would have been convenient to have consolidated all the appeal procedure.

The Solicitor-General (Sir Arthur Irvine): The hon. Member for Crosby (Mr. Graham Page) has a distinguished faculty for taking substantial Measures and seizing upon one item here and another there in a fashion that is not always expected and calls, I hope it will be thought, for a certain degree of versatility in replying, but I shall do the best that I can to deal with the point raised by him.
As I understand it, the Bill does not consolidate the provisions of the Administration of Justice Act, 1960, which relate to appeals from the Divisional Court of the Queen's Bench Division in Northern Ireland, or from the Court of Appeal in Northern Ireland to the House of Lords. I think that that is the matter with which the hon. Gentleman is concerned.
I want to explain to the Committee what is the background of this, because it may help towards an understanding of the point. The position is that until a quite late stage in the preparation of

these consolidating Bills—the Criminal Appeal Bill and the Criminal Appeal (Northern Ireland) Bill—both contained a separate part reproducing these provisions. They were relevant to the law relating to criminal appeals in this country and in Northern Ireland. On further consideration, however, it emerged that, having regard to the form and scope of the Administration of Justice Act, this approach had certain serious drawbacks and was even likely to make the consolidation impracticable or impossible. It was with some reluctance that it was decided by those who were concerned in the matter to abandon the idea and to confine both Bills to appeals from convictions and other findings made on indictment.
I can assure the Committee, and I trust that the hon. Gentleman will accept this from me, that the reasons for this decision were of a highly technical character. The process of consolidation does involve technicalities. I have studied them in this instance and I am satisfied that the right course was followed, but it was a technical point affecting what I think I can fairly and reasonably describe as the technique of consolidation.
The Committee will be interested, I hope, to learn that as regards this Bill, the Northern Ireland Bill, the responsible draftsman in Belfast, who had a detailed oversight of the Bill at all stages of its preparation, and the Secretary to the Lord Chief Justice of Northern Ireland concurred in the procedure that was adopted.
With this explanation, I hope the matter will be acceptable to the Committee.

The Deputy Chairman (Mr. Sydney Irving): In order that the Committee may proceed in an orderly fashion. I hope that the Committee will allow me to put the first 36 Clauses.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Clause 21.

SPECIAL PROVISION AS TO SENTENCE OF DEATH OR CORPORAL PUNISHMENT.

Question proposed, That the Clause stand part of the Bill.

Mr. Gerard Fitt: Could I ask for a little information in


relation to Clause 21 of the Bill? I ask my right hon. Friend under what section of the criminal code is flogging and corporal punishment still retained in Northern Ireland. If I am correct in my thinking, it is maintained in Northern Ireland under the provisions of the Special Powers Act, 1922, and I was wondering whether representations had been made or could have been made by my right hon. and learned Friend to the Northern Ireland authorities to do away with this particular Act, especially in view of the fact that Human Rights Year is being celebrated all over the world.

The Deputy Chairman: I am in some difficulty. I did not, in fact, dispose of Clause 21 so technically the hon. Gentleman is in order in speaking on it, but it is going to make the debate follow a very unsatisfactory course if a debate arises on Clause 21. However, if Mr. Solicitor-General would answer briefly we could perhaps get out of this difficulty.

The Solicitor-General: I am happy to do all I can to assist my hon. Friend in the matter that he has raised. I am sure he will take it from me that this is a Consolidation Bill; that what we are concerned with here is solely the question whether the contents of the Bill accurately set out the existing law. That is the point which I ask my hon. Friend to reflect upon and to accept from me, and it therefore follows, as I understand it, Mr. Irving, that any consideration of the merits of any particular provision would be quite out of order.

The Deputy Chairman: The Solicitor-General is perfectly correct.

Question put and agreed to.

Clauses ordered to stand pant of the Bill.

Clauses 37 to 55 ordered to stand part of the Bill.

Schedules 1 to 5 agreed to.

Bill reported, without Amendment.

Motion made, and Question, That the Bill be now read a Third time, put forthwith pursuant to Standing Order No. 55 (Third Reading), and agreed to.

Bill accordingly read the Third time and passed, without Amendment.

COURTS-MARTIAL (APPEALS) BILL [Lords]

Considered in Committee.

[Mr. SYDNEY IRVING in the Chair]

Clauses 1 to 50 ordered to stand part of the Bill.

Clause 51.

LEGAL AID.

Question proposed, That the Clause stand part of the Bill.

10.27 p.m.

Mr. Graham Page: This Clause is as objectionable as the similar Clause in the Criminal Appeal Bill which we discussed earlier. It repeals itself one month after this consolidation Measure comes into operation and that is not a proper form of consolidation.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Clauses 52 to 61 ordered to stand part of the Bill.

Schedules 1 to 6 agreed to.

Bill reported, without Amendment.

Motion made, and Question, That the Bill be now read a Third time, put forthwith pursuant to Standing Order No. 55 (Third Reading), and agreed to.

Bill accordingly read the Third time and passed, without Amendment.

RENT BILL [Lords]

Considered in Committee.

[Mr. SYDNEY IRVING in the Chair]

Clause 1.

PROTECTED TENANCIES.

Question proposed, That the Clause stand part of the Bill.

10.29 p.m.

Mr. Graham Page: Erskine May, on page 153, confirms that we may criticise consolidation Measures on the grounds that the words of the Bill do


not express clearly the law as it stands. I object to Clause 1 because subsection (3) does not express the law as it stands at all. If that subsection were omitted, we might have a reasonable statement of the law, but it should not be part of the Clause. I cannot go into the merits of a consolidation Measure, so I merely record my protest on subsection (3).

10.30 p.m.

The Solicitor-General (Sir Arthur Irvine): Confronted by a significant and distinguished product of the efforts of draftsmen and lawyers in dealing with the consolidation of the Rent Acts, the hon. Member for Crosby (Mr. Graham Page) resorts to this type of narking comment. I use the term advisedly because there has not come from him thus far—it may come later; I hope it will—a word of recognition for the distinguished labours that have gone into this extremely valuable task.
The hon. Gentleman's argument is that because subsection (1) is in its present form—namely, providing that a tenancy is within the Measure unless certain factors exist—this in itself raises the very presumption which is repeated in subsection (3).

Mr. Graham Page: indicated assent.

The Solicitor-General: I am glad to have an indication from him that that is his criticism.
The answer is that subsection (3) is derived from Section 7 of the 1938 Act and that it would, in our view, be unwise to omit a specifically statutory presumption solely in reliance on the form of words used in subsection (1). Whether that form of words is strong enough to raise a similar presumption is doubtful because it is arguable that the subsection merely makes a statement of fact.
Further to that, I ask the Committee to bear in mind that subsection (3) was specifically considered by the Joint Select Committee and was thoroughly dealt with. I suggest, therefore, that hon. Members should not willingly remove a provision which the Joint Select Committee, which was appointed to consider the Bill, examined and approved. Having considered the hon. Gentleman's comments, I do not hesitate to recommend the Clause in its present form.

Mr. Graham Page: In case it be thought that I have been discourteous and have not appreciated the tremendous work which has been done in consolidating in this Measure the law relating to rent restriction, I repeat what I said on Second Reading; that this is a mammoth task, undertaken splendidly by the draftsmen.
My complaint is that the Government have not helped the draftsmen by tidying up the law first. In this case perhaps the draftsmen overstepped the existing law and have thrown the onus of proof in some cases on the landlord where it stood on the tenant before. However, it is not open to me to argue the merits of this matter, and I repeat that subsection (3) is not the law.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

Clause 3.

STATUTORY TENANTS AND TENANCIES.

Question proposed, That the Clause stand part of the Bill.

Mr. Graham Page: My complaint about the Clause, which deals with the definition of statutory tenancies, is that it is an unsatisfactory form of consolidation to refer to an Act which is repealed in a Schedule to the Bill. Subsection (2) requires the reader to refer to something described as being
…within the meaning of the Increase of Rent and Mortgage Interest (Restrictions) Act 1920…
When one turns to Schedule 17 one finds that that very Act is repealed. This is an unsatisfactory way of consolidating. It means that we can never get rid of the old Acts. Although we repeal them, they are still with us; they never die and they do not even fade away under this Measure. I would have liked to have seen an end to some of these old Statutes.

The Solicitor-General: The Clause, and subsection (2) in particular, preserves the extensive case law surrounding the topic of statutory tenants. That is


its object and effect. It must refer to the old law since the case law which is picked up by the subsection is necessarily all founded upon the old law. The concept of a dwelling-house to which the Act of 1920 applied is, it is true, not relevant to a modern statement of the law. It was the 1949 Act which saw the beginning of the switch from the concept of dwelling-house to that of tenancy. But it is relevant to the existing case law. Accordingly, it is essential that the words in subsection (2) which explain the phrase
if and so long as he occupies the dwelling-house as his residence
should be couched in terms of the law as it is immediately before the consolidation Bill comes into force.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Clauses 4 to 13 ordered to stand part of the Bill.

Clause 14.

CHANGE OF STATUTORY TENANT BY AGREEMENT.

Question proposed, That the Clause stand part of the Bill.

Mr. Graham Page: The Clause deals with the exchange of tenancies. The Committee should be informed of what the draftsman himself thought of the Clause. He told the Joint Committee:
Could I begin by saying the whole topic is virtually of no significance whatever.
Later he said:
So far as one can see this section is effectively dead,…
I should have thought that this is not the right thing to include in a consolidation Bill. So far as there is any little shred of law remaining to be dealt with on the exchange of tenancies it should have been dealt with by disposing of it first in some form. There are many forms in which we can now dispose of old law in consolidation. One would have liked to see the Clause on the exchange of tenancies out of the Bill altogether.

The Solicitor-General: The criticism is made of that Clause that it reproduces

law which is virtually dead. This cannot be a valid point at the Committee stage, since Section 17 of the Rent Act, 1957 is still in existence. Its effect, however small, must therefore be reproduced in the Bill.
I trust that I shall be in order in dealing with the question of what the draftsman is alleged to have said about this matter. The hon. Gentleman must be very careful about this kind of thing, because in the helpfulness that he applies to this whole matter there is a risk that the draftsmen, these servants of the public whose work he says he so greatly admires, are misrepresented, no doubt inadvertently, in a matter of this kind.
As an example, the hon. Gentleman earlier observed that a draftsman, according to him, had been obliged to throw in his hand in a certain drafting matter. What the draftsman in fact said on that occasion, as is apparent from the Report of the proceedings of the Joint Committee, was that the purport of his note was to explain why in that relevant subsection he appeared, as it were, to have thrown in his hand. That is a very different matter. I hope that the hon. Gentleman will take note of this and be careful in that kind of observation.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Clauses 15 to 85 ordered to stand part of the Bill.

Clause 86.

PROHIBITION OF PREMIUMS AND LOANS ON ASSIGNMENT OF PROTECTED TENANCIES.

The Solicitor-General: I beg to move Amendment No. 1, in page 55, line 2, to leave out "before 8th December 1965".
It may be thought a remarkable tribute to those who have worked on this Bili that, having regard to the scale and scope of the Measure, there is only this single point on which I find it necessary to move an Amendment.
In Clause 86, we deal with the prohibition of premiums and loans on assignment of protected tenancies. Clause 85 dealt with the matter of such premiums and loans on the grant of protected


tenancies. The effect of the Leasehold Reform Act, 1967, is that certain long tenancies became regulated tenancies as from 28th November, 1967, and it was lawful to require a premium on the grant of such a tenancy at a time between 8th December, 1965—that is, the date on which the Rent Act, 1965, took effect—and 28th November, 1967. The result is that the words which the Amendment seeks to delete are unnecessary.

Amendment agreed to.

Clause, as amended, ordered to stand part of the Bill.

Clause 87 to 92 ordered to stand part of the Bill.

Clause 93.

MORTGAGES TO WHICH PART VIII APPLIES.

Question proposed, That the Clause stand part of the Bill.

Mr. Graham Page: This Clause deals with controlled mortgages. It was in connection with this Clause that on Second Reading I mentioned those words of the draftsman about throwing in his hand. I do not think that I misquoted. I said that they were words which he used. I said that it appeared that he had thrown in his hand after drafting this Clause so that, in order to discover what a controlled mortgage was and is, one must refer back to the whole of the previous law.
The draftsman said to the Joint Committee that he was giving it a note to explain why
I appear, as it were, to have thrown in my hand and said it means whatever it means now and that is as far as I can go".
Later he pointed out to the Committee:
In Clause 93(2) what I am saying is that if you wish to discover whether a mortgage is a controlled mortgage you must imagine that this Act has never been passed and therefore apply all the Acts from 1920 to 1939 and put those before a judge and get him to give a decision, because I am incapable, any more than the text book, of a satisfactory view on what the resolutions of some of the difficulties are".
He was therefore admitting that the only method he could see of dealing with this complicated matter was to say, "We retain all the law. Look back at the old law and see what it is". He had to do that because the Government had not assisted him by tidying up these anoma-

lies or by adopting some procedure of consolidation by which these anomalies could have been tidied up. It would have been better to leave this Clause about mortgages, or the several Clauses and the Schedule, out of the consolidation than to perpetuate anomalies which have given those practising in this branch of the law tremendous difficulties over the years.

The Solicitor-General: At least we have avoided the inaccuracy of which the hon. Gentleman is guilty.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Clauses 94 to 116 ordered to stand part of the Bill.

Clause 117.

MODIFICATIONS, AMENDMENTS, TRANSITORY PROVISIONS, REPEALS, ETC.

Question proposed, That the Clause stand part of the Bill.

10.45 p.m.

Mr. Graham Page: This Clause retains what lawyers practising in this branch of the law know as "old control". This is control which has existed since before 1939, and the Bill keeps it alive by subsection (1) and Schedule 14 which refers to the Act of 1920, the Act of 1939 and the Act of 1957. The first two are wholly repealed by the Bill, and all but one Section of the 1957 Act is repealed. We are therefore having to refer back to old Statutes which are repealed by this Bill. This cannot be a satisfactory form of consolidation. Indeed the draftsman pointed out to the Joint Committee that he had to retain "old control" although when he was asked:
Is the situation that but for this one point now regarding land let with a dwelling house, the whole concept of old control is really quite meaningless and obsolete?
the reply to that was:
That is substantially the position.
Here again we are perpetuating a difficult part of the law which is swarming with anomalies and which could have been left out altogether by being tidied up first.

The Solicitor-General: Without notice I cannot immediately check on what the


draftsman was asked and what he said in reply in this instance. The point which arises here seems to be the point which we had to deal with earlier. It is this: if one is to have consolidation and if there is in past law a provision which is still in effect, however small the effect may be, if pure and proper consolidation is to take place that provision of the law must be reproduced in the Bill.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Clause 118.

SHORT TITLE, COMMENCEMENT AND EXTENT.

Mr. Graham Page: I beg to move Amendment No. 11, in page 71, line 33, to leave out from first 'the' to end of line 34 and to insert:
'a day to be appointed by the Minister by order'.
At present the Clause brings the Bill into operation on the date on which it is passed. I want to refer back to the arguments which I have used in connecnection with "old control", exchange tenancies, controlled mortgages and I will add to that the transitional provisions of the Rent Act, 1957. All are perpetuated by the Bill. All of them give a great deal of trouble and difficulty to practising lawyers and all of them could have been disposed of before the Bill came into operation. That is why I hope that the Solicitor-General, even at this late hour, will agree that on these points at least steps should be taken to amend the law before the Bill takes effect. We would then be able to have a clean and tidy consolidation Measure without all the troubles and anomalies of the past in this branch of the law.
That is why I have tabled the Amendment that the Bill should not come into operation immediately it is passed, but on a day appointed by the Minister. That day would be after the House had had an opportunity of disposing of the anomalies which the Bill is perpetuating.

The Solicitor-General: I make it clear that there is no strong objection in prin-

ciple to the Bill being brought into force by Ministerial order, but the Government see no reason to delay the commencement of the Bill beyond the customary period of one month. We therefore see no virtue in a Ministerial order in this context.
Such an order would mean that, in order to find out when the Act had come into force, one would need both a copy of the Act and a copy of the relevant order. To that extent, as a matter of practice, a good deal of complexity and administrative difficulty would be involved. As it is, one will be able to tell from the Act alone when it comes into force, since the date will be printed in square brackets at the end of the Long Title in the usual way.
If the Act were to be brought into force by order, it would be vital that the order should be made by Statutory Instrument, as is customary with all commencement orders, since this ensures that copies of the order are freely available. The Amendment would not achieve this and I am sure that the hon. Gentleman would agree that a Ministerial order made otherwise than by Statutory Instrument would be an exceedingly unsatisfactory way of bringing any Act into force, let alone a major consolidation Measure. Accordingly, while the Government see no purpose in departing from the express terms of Clause 118(3), even if they were disposed to bring the Act into force by Ministerial order they would not feel able to accept the Amendment for this purpose.

Mr. Graham Page: The hon. and learned Gentleman has not really dealt with the point. He has dealt purely with points of drafting. I hoped that he would at least give an assurance that, although they wish to bring this Bill into force on the day it is passed, the Government would nevertheless give attention at once to the Amendments of the law on the subjects we have discussed in the course of this Committee stage. It is spoiling the ship for a ha'p'orth of tar to continue with this old unnecessary law, which is only an invitation to litigation.

Amendment negatived.

Clause ordered to stand part of the Bill.

Schedules 1 to 10 agreed to.

Schedule 11.

PREMIUM ALLOWED ON ASSIGNMENT OF TENANCY WHERE PREMIUM LAWFULLY PAID ON GRANT.

The Solicitor-General: I beg to move Amendment No. 2, in page 100, line 5, to leave out 'before 8th December 1965'.
This point follows directly upon the matter which I dealt with in the earlier Amendment.

Amendment agreed to.

Schedule, as amended, agreed to.

Schedules 12 to 17 agreed to.

Bill reported, with Amendments; as amended, considered.

Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 55 (Third Reading), and agreed to.

Bill accordingly read the Third time and passed, with Amendments.

SCOTTISH STANDING COMMITTEES

Ordered,
That, for the remainder of the present Session, a second Standing Committee shall be constituted for the consideration of Bills certified by Mr. Speaker as relating exclusively to Scotland and committed to a Standing Committee:

Ordered,
That the said second Committee shall, in respect of each Bill allocated to it, consist of not less than Twenty nor more than Fifty Members to be nominated by the Committee of Selection, of whom not less than Twenty Members shall represent Scottish constituencies; and in nominating such Members the Committee of Selection shall have regard to their qualifications and the composition of the House:

Ordered,
That all Bills certified by Mr. Speaker as relating exclusively to Scotland and committed to a Standing Committee shall be distributed between the two Committees by Mr. Speaker.—[Mr. Fitch.]

Mr. Speaker: I have not selected the Amendments to the next Motion (Procedure).

PROCEDURE

Select Committee appointed to consider whether any change is desirable in the number of the periods into which the

sittings of the House are customarily divided within the Parliamentary Session, and in the times at which such periods should begin and end; and whether the financial year ought to be the same as the calendar year:

Mr. Austen Albu, Mr. Donald Chapman, Mr. Denis Coe, Mr. Michael Hamilton, Mr. Selwyn Lloyd, Mr. John P. Mackintosh, Mr. David Marquand, Mr. John Parker, Mr. James Ramsden, Mr. David Steel, Mr. Turton, Dame Irene Ward, and Mr. Woodburn to be Members:

Power to send for persons, papers and records, and to report from time to time.

Four to be the Quorum.—[Mr. Fitch.]

EDUCATION AND SCIENCE

Select Committee on Education and Science to have power to appoint Sub-Committee and to refer to such Sub-Committees any of the matters referred to the Committee:

Every such Sub-Committee have power to send for persons, papers and records, to sit notwithstanding any adjournment of the House, to adjourn from place to place, to report to the Committee from time to time, and to admit strangers during the examination of witnesses unless they otherwise order:

Three to be the Quorum of every such Sub-Committee:

Committee to have power to report from time to time the Minutes of the Evidence taken before such Sub-Committees and reported by them to the Committee.—[Mr. O'Malley.]

PUBLIC ACCOUNTS

Mr. Frank Judd discharged from the Committee of Public Accounts; Mr. Gregor Mackenzie added.—[Mr. O'Malley.]

STATUTORY INSTRUMENTS

Mr. Gregor Mackenzie discharged from the Select Committee on Statutory Instruments; Mr. Kevin McNamara added.—[Mr. O'Malley.]

LOCAL GOVERNMENT (KINGSTON UPON HULL)

10.58 p.m.

Mr. Richard Wood: I beg to move,
That the Kingston upon Hull Order 1968 (S.I., 1968, No. 128), dated 31st January 1968, a copy of which was laid before this House on 9th February, be withdrawn.
I begin by expressing gratitude to the Government for arranging time for this debate after the 40 days for praying against the Kingston upon Hull Order, 1958 had come to an end.
My hon. Friend the Member for Haltemprice (Mr. Wall) has asked me to apologise to the Joint Parliamentary Secretary to the Ministry of Housing and Local Government for not being present. My hon. Friend is abroad. He and I have a justifiable interest in this Order because it incidentally makes slight in-roads into the two constituencies in the East Riding of Yorkshire which we represent, but, sad as we are to lose any constituents, that is not the reason for this Motion. We are instead raising the matter because of one issue contained in the report of the Commissioner, Mr. Paul Curtis-Bennett, to the Home Secretary, which was dated 9th November, 1967.
At the public inquiry which was held in August of last year, the Town Clerk of Hull explained that:
the proposals stemmed from the decision of the Ministry of Housing and Local Government to extend the boundaries of the city as from 1st April, 1968.
It is generally agreed that the revision of the ward boundaries in the City of Hull is long overdue. I am delighted to see one of the hon. Members who represents the City of Hull here.
Large movements of population in the city have taken place since the last revision of boundaries, which was 38 years ago, with the result that the electorate in the 21 old wards varied from about 1,000 to well over 20,000 yet each of these disparate electorates had identical representation on the city council.
Working on the electoral population figure, which he projected for 1973, of rather more than 200,000 in total, the Town Clerk prepared a scheme of redistribution, giving to an unchanged number of wards in the city an average of a little less than 10,000 electors each.
It is broadly true to say that there was no serious disagreement about the Town Clerk's proposed redistribution, but paragraph 4 of the Commissioner's report makes it clear that there was:
a fundamental difference of opinion as to whether or not completely fresh elections throughout the city were in consequence desirable.
In May, 1967, a meeting of the Hull parliamentary and general purposes committee had by a majority recommended that:
…existing councillors, not ordinarily due for election in 1968, be reallocated to the new wards in accordance with detailed provisions.
These provisions were then before the committee of the council. Again, I do not believe there was any argument against the detailed provisions. The argument was about the whole principle of reallocation, which is the matter I am raising tonight.
The arguments in favour of reallocation and against an immediate general election in Hull were as follow. First, that 28 of the 42 councillors who would be reallocated would still represent substantial numbers of those who had elected them. Secondly, it was put forward that a general election would be both expensive and confusing. Thirdly, that continuity of representation was desirable, and that councillors elected were entitled to serve their term. Fourthly, that at the last review in 1930, reallocation had been adopted. Lastly, that by 1970 the whole matter would in any case be adjusted; and examples of reallocation at Grimsby in 1956 and at Birmingham in 1961 were quoted in support of its adoption in the present case.
Against reallocation, and in favour of a general election, it was urged, first, that the other 14 of the 42 reallocated councillors would represent wards:
which had no connection with the electorates by whom they were returned.
It was also put forward that another six would represent areas which contained less than half of the electorate which had returned them. Second, it was suggested that the imposition of councillors on areas was undemocratic. Third, that councillors elected in May, 1967, knew of the possibility of a general election in 1968. Fourth, that the administrative problem of such a general election was not insuperable. Fifth, that a multiple


election had taken place successfully at the end of the war.
While the Commissioner accepted the force of the arguments in favour of reallocation and against a general election, he concluded in paragraph 9 of his Report:
None of these considerations outweighs in my view the fact that the choice of reallocation involves the imposition of no less than one-third of all the councillors reallocated upon districts which have no part in their election…
The final words of his sentence are even more noteworthy:
…and which in many cases would almost certainly not have returned them if they had.
Later in the same paragraph he added:
Had there been general agreement to such a course, the dictates of democracy might perhaps have been permitted to yield to the considerations of convenience; but it is clear that a substantial body of representative opinion in the City favours a 'general' election, and my view…would be that, in such circumstances as these, it is entitled to one.
Therefore, the Commissioner's formal recommendations included, in paragraph 11(b) of his Report,
…that there should be a fresh election of all councillors and aldermen in 1968.
He added, in paragraph 11(c):
…that if reallocation…is preferred, the system of reallocation should be"—
and he specified various lines which have been broadly agreed.
This Report went to the Home Secretary and, on 11th January, 1968, a letter was written on the Home Secretary's behalf which ran directly counter to the leading recommendation in the Commissioner's Report. Paragraph 8 of the letter says that he
appreciates that…the ward boundary alterations are such that existing councillors cannot be allocated to the new wards, so as in every case to continue to represent a substantial proportion of their former constituents.
I suggest that that is a masterly understatement. In only one ward out of the 21 are the boundaries unchanged. In all the other 20, some part of the electorate will be forced to accept, as its representatives, councillors with whom it has had no previous connection; and in no less than seven of the wards, the allocated councillors will not represent any of their present electors. Therefore, over half the

electors of Hull will now be represented by councillors whom they have not elected.
The Home Secretary's letter continued that
…the principal aim of the present rewarding being to avoid aggravating the imbalance which has arisen over the years in the existing ward electorates…there should be no more disturbance than is necessary to achieve that end.
But that is precisely the point on which the Commisisoner thus commented in paragraph 9 of his Report:
The present council is itself the product of a ward structure which has become grossly out of balance, and a revision of which seems to me…to have been overdue.
He ended:
To re-allocate councillors when such a revision has officially been made seems to me to prolong an anomaly unjustifiably.
Nor is the Home Secretary's decision consistent with those reached in similar circumstances in other cities. For example, in Bradford and Leeds a similar ward revision will be followed next month by a full election of all councillors and aldermen.
I am not naturally suspicious, but in searching for differences between Leeds and Bradford, on the one hand, and Hull, on the other, the only relevant one I have so far found is the existence already of a Conservative majority in the two former cities and not in the City of Hull. Understandably, therefore, the Home Secretary is less worried about a disturbance—I take his own word—in Leeds and Bradford, than in the City of Hull, where I suggest that the existing Socialist majority would not only be disturbed but utterly overwhelmed by a similar full election.
It is not unnatural, in the circumstances of today, that the Hull Labour Party should send distress signals to the Home Office; but having a deep respect, as I do, for the courage and integrity of the Home Secretary, I find it less easy to understand why he should agree to send such a disreputable lifeboat to rescue the quivering councillors from the mounting storm.
Having studied the Commissioner's report and the Home Secretary's reply, I can reach no other conclusion than that the Home Secretary has overridden the Commissioner's decision in the hope of maintaining for a little longer Socialist


control of this great city. I do not believe that any objective observer would reach a different conclusion. I am convinced that any political party that hopes to hold on to power by methods like this has not only plumbed the depths of despair, but fully deserves the ultimate rejection which will be accorded to it by the electors of Hull.
I have contemplated asking my right hon. and hon. Friends to join me in voting against this unworthy decision, but I am conscious that the Government on these occasions can use its dwindling but still large majority to force such a decision through. I therefore concluded that a Division would be unlikely to be fruitful. None the less, I felt that this bad business deserved discussion in Parliament so that the representative of the Government could defend the decision as best he may, and in order that the electors of Hull, who are most closely concerned, could draw their own conclusions, and act accordingly, in the opportunity which will shortly be afforded to them.

11.14 p.m.

Mr. Kevin McNamara: I was interested to hear what the right hon. Member for Bridlington (Mr. Wood) had to say, but I could not help thinking that in raising the matter in this way it was a trifle unworthy of him. I do not think that his interest is as great as he suggests. I tried to think what reasons the right hon. Gentleman and other hon. Members from the East Riding of Yorkshire might have in raising this matter. I thought perhaps they had constituency interests. Granted there have been small incursions on their constituencies, but none of the other local authorities have complained. In fact, I understand that they are surprised that this Motion has appeared on the Order Paper.
There are certain constituency interests. The leader of the Tory group on the Hull council does not live in Hull. He lives in the right hon. Gentleman's constituency, so for that reason I suppose the right hon. Gentleman has a legitimate constituency interest. I then thought that perhaps hon. Gentlemen opposite were realising the evil being done to Hull by the famous, or infamous, "Hands off Haltemprice Campaign", because as a

result of the rather remarkable decisions made by the then Minister of Housing and Local Government, Hull did not get all the land that it needed for housing purposes from the East Riding. In fact we have only a limited amount of land. I thought that they were coming to the support of Hull to enable it to get the extra land that it needs for housing purposes, but that was not the case.
I then thought that perhaps many of their constituents work in Hull where they make use of the tremendous amenities which are lacking in their own areas, or perhaps they worry about the fact that some of their constituents do not get the same public services as are supplied by the city council of Kingston upon Hull, and they want these for their constituents, but that is not the case either.
Having made his political points, the right hon. Gentleman said that he would not divide the House. It would have been nice to have had a Division on this issue.
I shall not go over the facts as outlined by the right hon. Gentleman or deal with the extracts from the various reports to which he referred. Much of what he said is correct, but I challenge some of his conclusions. The city council in Hull decided on allocations, and the reasons have been outlined by the right hon. Gentleman. Hull is a large thriving city. Its health, welfare and education services are the envy of many parts of the country. It seemed reasonable to retain in office the gentlemen who had been responsible for building up and administering those services, and this was therefore a reasonable decision to take.
In addition, however, the 1933 Local Government Act contains specific provision for my right hon. Friend the Home Secretary to agree to allocations if he wishes, and here I come to something over which the right hon. Gentleman skated very quickly. We have a precedent in Hull for allocations. In 1930, 38 years ago, a precedent was created there by a Conservative-dominated council. I agree that that precedent is not on all fours with this case because here, under the town clerk's scheme, we have 21 wards, 63 councillors, and 21 aldermen being allocated.
What did the Tories do in 1930? There were then 16 wards in Hull. The


number was increased to 21, and there were allocated 32 councillors and 16 aldermen. The remaining 5 new wards had to elect three councillors, and there were elections for the aldermen. It is dangerous for the right hon. Gentleman to try to make political points when he knows that in 1930 there was a clear example of a terrible abuse of political power. Under the Tories the number of wards was increased from 16 to 21. In 1968 there were 21 wards, and the figure is to remain unchanged. We have an allocation of councillors who, in many cases, will have a great deal in common with the wards to which they have been allocated.
I would, perhaps, feel a little guilty about this if I felt that as a result of the changes my own political party would retain control, but it is quite possible under the situation in May that the Labour Party may lose control. It is on the cards. Therefore, I think that the latter point made by the right hon. Gentleman is not really substantive.
I think that we have here a good case and a strong case for allocation. We have had many years of devoted and honourable service from all the political parties in Hull on the council, and it would be wrong to run the danger of losing so much of that experience. It will still be there, whichever party is in control after May.

11.21 p.m.

The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Arthur Skeffington): The right hon. Gentleman the Member for Bridlington (Mr. Wood) has raised this matter in his usual very thorough and courteous manner, although he did have something to say at one stage in criticism of my right hon. Friend the Home Secretary which I thought was very unusual, coming from him.
I will certainly repudiate what he said in suggesting that my right hon. Friend's motives were not judicial when he came to a decision in respect of this Order.
Knowing my right hon. Friend as the right hon. Gentleman does, and bearing in mind the right hon. Gentleman's own career as a Minister, I am rather surprised that he should, on such sparse evidence, have made this charge, and also that he should have made it on a pro-

cedural Motion. I should have thought there were other ways open to him if grave charges of that kind were to be made.
But I acknowledge—and I am glad to do so in view of the fact that my hon. Friend the Member for Kingston upon Hull, North (Mr. MacNamara) is here—and confirm what the right hon. Gentleman said when he stated that the Order in general has been welcomed, because it allows for additional building land to be included in the City. Therefore, it will, I think, be greatly in the interests of the local authority and of those it serves that it now will have an area for its building operations and for other services, which will be of great advantage to all concerned.
The reason the Order was made, despite the statement by my right hon. Friend the Minister of Housing and Local Government about not going forward in general with Orders in the light of the considerable progress of the Royal Commission, was that this was an agreed Order. At least, these changes which the Order makes were agreed. Hull's need for further housing was not disputed by the other local authorities affected, the East Riding County Council and the Beverley Rural District Council.
So we really come down in this debate to the very narrow issue of whether the decision contained in the Home Office letter of 11th January is right in all the circumstances.
The House may wonder why it is that I am answering the debate, and not a Home Office Minister, but this is an Order which is made under the Statutes respecting the alteration of local government Orders, and as this Ministry was responsible for that, it takes general responsibility for the Order itself.
I think the right hon. Gentleman realises that the Motion really cannot be effective because the 40-day period has expired, and indeed the Order is now in operation. So this is—I was going to say a propaganda effort but I do not want to be in any way offensive—a public relations exercise rather than going into the merits of withdrawing the Order.
The right hon. Gentleman stated quite fairly the arguments of the parties at the inquiry, which was held under the authority of the Secretary of State into


the re-warding of Kingston upon Hull. There were sound reasons for a fresh scheme. The boundaries in Hull were very old, and, with the addition of these areas for rehousing, it would not have been possible to tack them on to existing wards, since that would have worsened the imbalance.
The right hon. Gentleman was right to point out that arguments advanced for reallocation rather than a fresh general election of councillors over the whole area and he put both cases fairly. I would direct the attention of the House and anyone else interested, in view of the right hon. Gentleman's subsequent charge, to the case for reallocation in paragraph 8 of the local inquiry report. Heads (a) to (g) are quite convincing arguments supported by the evidence of Mr. Hall and his reference to Grimsby and Birmingham. In this question of a reallocation or a general election of all councillors, two views can be taken and we should remember what the Commissioner said, dealing partly with this argument, in paragraph 9, that his view, without prejudice to the situation as it may or may not have existed in any other cases cited, as to which evidence was sparse, was that, in justice, the city is entitled to a general election. The right hon. Gentleman referred to Leeds and said the evidence is sparse. This is entirely a matter of judgment.
I can do no better, dealing with the reasons why the Home Secretary considered that reallocation was the better alternative, than to refer to those passages in that Home Office letter of 11th January to which the right hon. Gentleman referred, particularly paragraph 8. There is there, in the case of an expanded city, a case for maintaining continuity rather than having a clean sweep.
This is a matter of judgment and the Home Secretary may have been wrong, but I greatly resent and utterly repudiate the allegation that he made it for political purposes. I do not think that it should have been made any more than I would suggest that the only reason why the right hon. Gentleman has raised this matter is the approach of the May elections. Both allegations are unworthy and I will not pursue them.
In this argument for reallocation, the council put the emphasis the other way

round, that, of the 42 councillors to be re-elected, more than half—28—would still represent substantial numbers of those who elected them. This is another way of putting the case. The right hon. Gentleman concentrated on one-third, but in fact more than half will still represent a substantial number of those who elected them.
Even if the Home Secretary had adopted another view, that there should be a "general post" of all councillors, it is often the case that the city itself requests, or the Home Secretary thinks it right, that all aldermen at least should remain for the term for which they had been elected. I am not arguing whether we should have aldermen or not but one of the general cases for them, once they are there, is that they continue to represent an element which has been there since before the change, and bring to two councils whose composition changes an element of stability. It might well have been the case that even if there had been a general post for councillors, the Home Secretary would have thought it right that, in the circumstances, aldermen should remain in office—

It being one and a half hours after Ten o'clock, the debate stood adjourned.

Debate to be resumed Tomorrow.

STUDENT GRANTS

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Harper.]

11.30 p.m.

Sir Edward Boyle: I am grateful for this opportunity tonight of raising a short debate on the subject of student grants. The House will recall that when the Prime Minister made his statement on 16th January last on the economic cuts he said:
Following the next review of students awards, the increase in September will only cover half the rise in the cost of living since the last review".—[OFFICIAL REPORT, 16th January, 1968; Vol 756, c. 1587.]
When we debated education on 14th February, I commented on this decision of the Government:
I must say that I am not happy about this arbitrary and unselective cut, if only for this


reason, that whether one wants a more rapid or relatively less rapid rate of university expansion, higher education ought to be available to every really able student in the country, irrespective of means".—[OFFICIAL REPORT, 14th February, 1968; Vol. 758, c. 1366–7.]
It is because of that doctrine that I raise this matter tonight.
I have always believed that the general approach of the Robbins Committee was right; that competition for university entry is sufficiently hot already. In any case, whether we believe in a relatively more or less rapid rate of expansion, in either instance access to higher education should be available irrespective of means.
I fully realise that one must look at this question of student grants in relation to the educational budget as a whole, and I hope that the House will acquit me in what I say of an irresponsible approach to this matter. There were quite severe measures—in some respects they were very severe indeed—announced in January of this year and there was also, although we are not here debating it, the postponement of the raising of the school leaving age and the serious decision regarding the rate support grant.
The annual increase in educational expenditure is being cut from 6 per cent. to 3½ per cent. in real terms, and undoubtedly the effect on the schools is serious. In the present economic circumstances it would be irresponsible for my hon. Friends and I to give priority to increases in grants over other aspects and sectors of educational expenditure, however reluctant we may be to accept the 50 per cent. reduction.
Having said that, I must say how unhappy I feel about the present situation. Assuming that the suggestions which have appeared in the Press are correct, when the report that we are expecting from Professor A. J. Brown and his Committee appears, it looks as though the Secretary of State will award about an extra £25 for London students, yet my information is that hall fees alone will rise by about £39.
We should remember exactly what the problem facing students will be when they have these increased grants, which will be very considerably less than the percentage increase in the fees in halls of residence. It is for this reason that I

repeat the strong request which I made to the Minister; that a special review of student grants should be undertaken in 12 months' and not in two years' time, so that the effects of the Government's action—in the light of higher residence and refectory charges, the increased cost of books and so on—can be seen and the amount of hardship assessed. We must remember the expectation of higher costs not only for halls of residence but for many other things. I mentioned books particularly, and the House knows that I have an interest to declare where anything in that field of publishing is concerned. But we must bear in mind the effects of devaluation and higher raw material costs. Many costs will be rising during the next 12 months.
My next point concerns the question of the parental contribution. We on this side of the House unreservedly welcome what I think was the last decision taken by the former Secretary of State, when he did what many of us on both sides of the House had been pressing him to do and raised the starting point of the means test scale from £700 to £900. Having been associated with a number of criticisms of the right hon. Member for Leyton (Mr. Gordon Walker), I should like to say that I think his last action as Secretary of State was perhaps one of his most fortunate. Certainly we very much welcome the increase.
Even so, one has the feeling that many parents are assessed to make a contribution who either cannot afford to do so or do not do so. This causes a considerable amount of hardship and ill-feeling. I have reservations about the Government forcing parents to pay, as this would be an interference with family responsibility. But the situation here is serious. A carefully designed plan is necessary. Could not we have at the very least a system of information to parents on how that grant is made up and their part in it, so that they realise the importance of making a contribution to the student?
My third point, which I have pressed before, is that a thorough review of the whole present structure would be of considerable value, since it has grown ad hoc over the years. Just as I have always believed that there should be a regular review of the progress of the Robbins recommendations, so I think that it would be a mistake, having had the Anderson


Committee reporting in the early 1960s, just to leave it there. There should be a permanent review of the whole subject.
In particular, I ask the hon. Lady to say something about the arrangements for discretionary grants and anomalies that arise from them, particularly as regards colleges of education. I was Financial Secretary to the Treasury when the arrangements were made after the Anderson Report. In those days the colleges of education contained not much more than 30,000 students. Today there are about 90,000 students in them. The whole share of higher education of the colleges of education is infinitely more significant today than it was six years ago. We badly need a review of the whole scope of the discretionary grant arrangements and the anomalies that can arise.
I do not want to take too much time, because other hon. Members would like to speak, but I should like to raise two other points. In the minds of students, serious students who are capable of putting their views on paper in a precise and articulate way, there are quite a number of other minor but irritating anomalies in the methods of paying additional sums for vacation courses and travelling expenses. Payments for vacation courses, and in the case of some authorities travelling expenses, are almost invariably made weeks or months after the expenses have been incurred. For students at universities some distance from their homes, travelling expenses can amount to as much as £30 or £40 a year. Those on courses involving a considerable amount of field work are also penalised in the same way.
Lastly, I fully understand that if a student is sent down for any reason or convicted of a criminal offence he cannot expect the payment of his grant. None of us would condone certain aspects of unruly behaviour or damage to property, but I should regard any what I would call intimidatory letters to students—as it were, the payment of grants under threat of good behaviour—as a retrograde step. I am not sure that all of us would qualify if Members of Parliament were paid in the same way.
In reiterating the importance of the requests I have made, and particularly

my request for a special review in 12 months, I would say that we in the House should pay tribute—and I hope that it is less embarrassing and less damaging to do it now—to the quite outstanding moderation and successful statesmanship of student leadership during recent weeks and months. All of us in the House would wish to pay tribute to what has been a very responsible discussion of this matter by student organisations. We must look at this question in the context of the whole educational budget. If there must be reductions in educational expenditure and priorities, none of us would suggest that the students can opt out altogether. None the less, it is equally important to remember that we do not want students to suffer hardship and that many essentials to student life are going up in price, and we have a responsibility, having set before the people of this country and the younger generation the ideal of the expansion of higher education, to ensure that students receive a level of grants reasonable on which to live during their period in a university or some other college.
I have raised this matter in order to express some concern which is felt on both sides of the House and to hope that the hon. Lady can promise us that we shall have the review which I regard as essential so that we can assess the effects of the Government's action, bearing in mind the results of higher residential and refectory charges and the increased cost of books and thus ensure that no unreasonable hardship is caused to students, the overwhelming majority of whom wish to work hard and make the best possible success of their courses.

11.43 p.m.

Mr. Peter M. Jackson: I am grateful to the right hon. Member for Birmingham, Handsworth (Sir E. Boyle) for giving me the opportunity briefly to raise one matter. I wish to direct attention to a news item which appeared in The Guardian of 24th April. It was a report from the correspondent in Manchester stating that about 25 students who participated in the recent demonstration in Manchester were having their conduct reviewed by the university authorities with a view to disciplinary action. The matter is


merely under review. No decision has yet been taken by the university authorities. I very much hope that they will not proceed.
Nevertheless, they have, prior to taking a decision, sent out a letter to the local authorities of the students concerned, the terms of which disturb me. The letter states:
We feel that your Authority might have a justifiable grievance if a full grant were made available when possible proceedings were pending".
I draw attention to the qualification—"possible proceedings were pending".
I very much regret having to draw my hon. Friend's attention to the response by local authorities which received this letter. Some of them acted in a fair way, noted it and indicated that they proposed to take no further action. Others have written letters which I can only regard as intimidatory. I will not read all the letters I have, but I should like to draw my hon. Friend's attention to one written by the Director of Education of the County Borough of Blackburn. It says:
In addition I must also point out that any further involvement…
again it underline the word "involvement"
by you in disturbances of this nature will necessitate immediate consideration being given to the withdrawal of financial support at present being given by the Committee.
The letter does not say "if the student is accused or convicted of a misdemeanour" but "if the student is involved in any way in a demonstration" and it comes to the notice of the County Borough of Blackburn it will then consider withdrawing the grant. I hope other hon. Members share my view that this letter is a form of intimidation which I feel should be repudiated. I hope that my hon. Friend will indicate that this letter is not supported by the Ministry.

11.46 p.m.

The Minister of State, Department of Education and Science (Mrs. Shirley Williams): I am grateful to the right hon. Gentleman the Member for Birmingharn, Handsworth (Sir E. Boyle) for raising this subject on the Adjournment. He fairly said that he recognised that the share of the educational budget going to universities was substantial and that at a time when cuts were being made

in other aspects of education, not least those concerned with less privileged children, one had to expect cuts even at university level.
It is fair to say that the present grant system had a recent birth. It dates back only to 1962 and since that time there has been a sharp increase in the overall cost of student awards. It is worth mentioning that whereas in 1963–64 the total value of all student awards was £71·3 million, in 1967–68 it had jumped to £129·6 million and next year, after the Brown recommendations are carried out, it is expected that the total sum will be £155·4 million. That is an increase of 118 per cent. over only five years.
It is a matter of regret both for my right hon. Friend and myself that there should have been any reduction in the increases proposed by the Brown Committee. I should say in relation to what the right hon. Gentleman said about students' hostel charges that the charges likely to be made in September were taken into account by the Brown Committee which made inquiries of all universities concerned in this matter. Consequently the increases in grant proposed by Brown reflect the effects of this information. With regard to the particular point about London it is correct that there has been a rather larger increase in the charges at London than at other universities. One reason is that London was attempting to bring in the increase at the same time as the review of awards takes place. Consequently, there has been a sharp jump in London because the last increases were made at the time of the last student awards review. This does not make the position any more fortunate but it goes some way to explain the jump from the low cost and meets the point put forward by the National Union of Students.
With regard to questions about changes which can be made in the grant system, this is a reduction by half of the increases as a result of the Brown Committee's study.
I thank the right hon. Gentleman for what he said about parental contributions. Not only has there been an increase from £700 to £900 in the starting point, which goes further than any increase in the cost of living would suggest was necessary, but there is to be a


reduction in the contribution made by those parents with a residual income of not more than £1,100. This will be compensated by a higher contribution from parents with a higher income.
The right hon. Gentleman will know that his points about supplementary awards, vacation grants, grants for dependants and the position of mature students with two homes are being studied. Supplementary awards will be paid in full.
I make it clear that this is the subject of consultation with local authorities. We hope to be able to announce a number of other changes which may affect the position of students in a particularly vulnerable position. This again is something I cannot tell the House any more about tonight, because it, too, is the subject of consultations with the local authorities.
The right hon. Gentleman raised the question of when a review might take place. I share his view that, because of the reductions which have been announced with regard to the Brown Committee's findings, this review might take place at a more rapid interval than the three-year interval which has been in operation since 1962. But I cannot give an unconditional commitment of this kind because it will depend very much upon the economic situation. When that situation allows an early review, my right hon. Friend and I will be willing to consider that possibility.
With regard to the point about discretionary grants, I am aware that this creates a number of difficulties. In February, my right hon. Friend the Member for Leyton (Mr. Gordon Walker), then the Secretary of State, announced that post-graduate grants were being considered for transfer to central Government. This matter is now being considered by an inter-Departmental working group and we shall make an announcement as soon as it has finished its work.
With regard to discretionary grants in further education—a fast growing sector—only in 1962 did Parliament decide that, because these courses were so different in type, length and kind, it would be impossible to lay down formal

commitments for local education authorities. The Department has advised local education authorities not to treat these awards in very different ways but as far as possible to follow the same standards in making awards of this kind, in particular where illness or something of that kind intervenes. In terms of the 1962 Act, the Department cannot go further than that, since the powers were clearly left with the local authorities.
It is fair to say that many students do not realise that they can claim grant for any travelling expenses over £12 a year incurred by them, and I use this occasion to advise them to approach their authorities on this matter and also on matters where hardship may arise during the vacation, where again local authorities can make supplementary allowances.
With regard to the point about the parental contribution, I share the right hon. Gentleman's feeling that it is important that parents should realise that the parental contribution is not asked for as a form of pocket money but as an essential part of what is a grant closely related to fees and maintenance costs of universities, colleges of education, etc. We are trying to do all we can to bring home to parents the crucial element that their contribution comprises.
We should like to be able to say that we could do without the parental contribution, and this feeling is strongly held by the N.U.S. but at present the contribution amounts to £27 million and it is estimated that next year it will be £30 million, even allowing for the changes which have been made, and it would be impossible for me to say at present that the Department could pick up a cheque of that size. But I take this occasion to use the House of Commons to suggest to parents that their contribution is an essential part of the grant system. Even though 97 per cent. of students get some form of award, nearly half depend upon some parental contribution. There is no doubt that students who do not get this contribution may be in hardship—indeed, they are in some cases—and we will, as I have said, endeavour to find ways in which we can bring this fact personally home to parents.
I echo the view of the right hon. Gentleman and of my hon. Friend about the attitude of student organisations during what is for them a critical period. It compares extremely favourably with the position which student organisations in some other countries have taken, and they have consistently recognised that, where they can use constitutional channels, they will try to do so. In paying tribute to them, it is worth saying that they have tried to strengthen rather than weaken the democratic system and as such they have shown a rare degree of statesmanship.
I turn to the point raised by my hon. Friend the Member for The High Peak (Mr. Peter M. Jackson). In the case of Manchester, two students have been suspended for their share in the demonstrations against my right hon. Friend the Member for Leyton, the then Secretary of State. I understand that a number of students subsequently indicated that they shared responsibility for the demonstration. The university, however, made it clear to them that it did not wish to take further action beyond that taken to suspend the two students. As a result, the students were informed that no further action would be taken unless they made it clear that they wished to be regarded as equally culpable with the two students. So far the students have not replied to this request from the university, so it is not clear whether they take the view that they were equally culpable. There is some likelihood that they will not reply until term begins.
My understanding, although I am not aware of the position in Blackburn, is that in no case is grant being suspended. In one case the grant will be paid only for the beginning of next term, but there is no question of grant being suspended until the position is known. Nor will grant be lost until the position is clear in regard to the students. The legal requirement on local authorities is that they should not pay grant if a student is absent without permission of the university or is not permitted to attend a course. Local education authorities are permitted to withhold grant but only after consultation with the academic authorities.
In response to the direct question asked by my hon. Friend, I would deprecate any attempt by an award-making

body, be it local authoritiy, Department of Education or a body making postgraduate awards, to go beyond this and to suggest that students should behave differently from other citizens although they are obviously required to observe university discipline. My hon. Friend will not expect me to comment further on the particular case he raised because I have not seen the correspondence and it would not be proper to do so.
In regard to the difficult question of increases in hostel charges and other forms of charge to students, we are aware that the position was very different between one university and another. We are in consultation with the University Grants Committee about increases which seem substantial and I understand that the universities are looking as closely as possible into expenditure which might be saved to avoid substantial increases in hostel charges. The point has often been made by the National Union of Students that economies might be made by looking closely at the way in which hostels are administered. This in the end is a matter for the universities themselves. I have reason to believe that they are considering it very carefully and a further attempt will be made to meet the position where there is any possibility of making economies.
I recognise the difficulty in regard to the cost of books following devaluation, particularly books from America. This has been taken into consideration by the Brown Committee. Further consideration will be given to students studying abroad including those who are affected by devaluation.
I again thank the right hon. Gentleman for raising this matter. I wish that I could have gone further, because it is a matter which arouses great and genuine feeling. It is fair to say that, despite all this, we retain a system of grants and awards which goes well beyond anything which exists in any other country. Although there is yet far to go, it opens the doors of universities to students whose parents could not afford to pay the fees and maintenance grants and we would not wish to see that system changed.

Question put and agreed to.

Adjourned accordingly at one minute to Twelve o'clock.